From:Andrea Prat 
To:"John P. Rust" 
Subject: RESTUD: decision on your submission

Dear John and Sungjin:

Based on advice of referees and my own reading of your submission, MS 11757, entitled "The Flat Rental Puzzle" I have decided to give you an opportunity to undertake revisions for possible
publication of this paper in Review of Economic Studies.

I have received two superb referee reports (attached). Both referees are very positive about your paper, except for one important proviso which I will discuss shortly.

Both referees -- and myself -- find what you are trying to do here quite exciting. Your paper shows that economics has made amazing progress. We now have theoretical and empirical tools to help
companies make better business decisions. Obviously, these tools are far from perfect but the advantage of this style of work is that assumptions are transparent from the outset. Your paper is
potentially very important and I can see this work being used as an example by many others.

However, there is a serious overlap between the present paper and "Is econometrics useful for private policy making: A case study of replacement policy at an auto rental company." I understand from
our email exchange that that paper is now being revised for the Journal of Econometrics.

I have discussed the issue of the overlap with the two referees. R1 is still in favor of a R&R and believes that you should be asked to minimize the overlap between the two papers. R2 is less
positive and writes: "If the econometrics and problem are outlined in the other paper, and the contribution of this paper is pure simulation, then that seems a bit narrow. If it is the theory at the
beginning that is the focus of the paper, then I think (though you are in a much better position to judge this) that it's not quite deep enough for a top journal. I'm pretty sure there's one good
paper here, but I'm not sure there are two good papers." However, he/she also believes that "An alternative would be to ask them to resubmit once they have experimental results; at that point the
paper's emphasis would change and it would hopefully be more distinct from the other paper."

Based on my own reading, I believe that as things stand the overlap is too serious to allow for publication. Rather than making specific suggestions as to what material should be allocated to each of
the two papers, I prefer to leave this decision to you. However, in order for this paper to be publishable on the Review I would think that: (1) It should focus on the flat-rental component of the
puzzle; (2) The analysis should be self-contained and the paper should be fully understandable to people who have not read your J of Etrics piece; (3) You should explain carefully what the
relationship between the two paperes is in the beginning, but then technical cross-references should be kept at a minimum; (4) It should report preliminary (but meaningful) results of the experiment
that the car rental company is currently carrying out (I understand that they will be available shortly).

The referees also have a number of other suggestions, dealing mostly with alternative explanations for your results. All these suggestions seem reasonable to me and I would ask you to take them
onboard in your revision. In particular, I am concerned by the potential (unobserved) non-linearity of maintenance cost for older cars (R1 and R2), by the potential presence of large reputational
costs to the firm when a car breaks down (R1), and by consumer heterogeneity (R2).

If you decide to send a revised version of your paper, may I ask you to detail how you have responded to the referees' comments, especially wherever you choose not to follow their suuggestions. In
this case, I would also ask you to attach the final version of the J of Econometrics piece and to discuss the residual overlap.

Let me spend some words to clarify my policy for revisions. My goal as an editor is to identify worthy papers and publish them without undue delay. I plan to have one round of revision only. If I
receive a revised version from you, I will pass it to the referees and I will ask each of them whether they are satisfied with the new version. I will also read the paper myself and, on the basis of
the referees' opinions and my own reading, I will make a final decision on whether your paper is accepted (subject to revisions) or rejected. Hence, you will have only one chance to incorporate the
reviewers' suggestions. On balance, I believe that this procedure is in the interest of the authors because it favors quick and clear-cut editorial decisions.

Please feel free to contact me if you have any questions about my decision,
or if you have difficulty reading any of the attachments.

Thank you for giving us the opportunity to consider your work.

Kind regards,

Andrea Prat

Review of Economic Studies