nep-bec New Economics Papers
on Business Economics
Issue of 2023‒03‒13
eight papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Facts of US Firm Scale and Growth 1970-2019: An Illustrated Guide By Robert Parham
  2. Patents that match your standards: firm-level evidence on competition and innovation By Bergeaud, Antonin; Schmidt, Juliane; Zago, Riccardo
  3. Essays on incentive contracts, M&As, and firm risk By An, Suwei
  4. Reversal of Bertrand-Cournot Ranking for Optimal Privatization Level By Paul, Arindam; De, Parikshit
  5. Selling Data to a Competitor By Ronen Gradwohl; Moshe Tennenholtz
  6. The consequence of societal secrecy for financial constraints By Olayinka Oyekola; Samuel Odewunmi
  7. Strategic choice of price-setting algorithms By Buchali, Katrin; Grüb, Jens; Muijs, Matthias; Schwalbe, Ulrich
  8. Automation and Productivity: Evidence from Thai Manufacturing Firms By Kanit Sangsubhan; Kumpon Pornpattanapaisankul; Pisacha Kambuya

  1. By: Robert Parham
    Abstract: This work analyzes data on all public US firms in the 50 year period 1970-2019, and presents 18 stylized facts of their scale, income, growth, return, investment, and dynamism. Special attention is given to (i) identifying distributional forms; and (ii) scale effects -- systematic difference between firms based on their scale of operations. Notable findings are that the Difference-of-Log-Normals (DLN) distribution has a central role in describing firm data, scale-dependent heteroskedasticity is rampant, and small firms are systematically different from large firms.
    Date: 2023–02
  2. By: Bergeaud, Antonin; Schmidt, Juliane; Zago, Riccardo
    Abstract: When a technology becomes the new standard, the firms that are leaders in producing this technology have a competitive advantage. Matching the semantic content of patents to standards and exploiting the exogenous timing of standardization, we show that firms closer to the new technological frontier increase their market share and sales. In addition, if they operate in a very competitive market, these firms also increase their R&D expenses and investment. Yet, these effects are temporary since standardization creates a common technological basis for everyone, which allows followers to catch up and the economy to grow.
    Keywords: standardization; patents; competition; innovation; text mining
    JEL: L15 O31 O33
    Date: 2022–10–24
  3. By: An, Suwei (Tilburg University, School of Economics and Management)
    Date: 2023
  4. By: Paul, Arindam; De, Parikshit
    Abstract: We consider a vertically related differentiated product mixed duopoly market where a public and private firm compete in the downstream market. The public firm is partially privatized and a welfare maximizing regulator chooses the privatization level. The production of the final commodity requires a key input that is supplied by a foreign monopolist who in the upstream market can practice either uniform or discriminatory pricing. We show that with uniform pricing regime the privatization is always larger under Cournot competition while in case of discriminatory pricing regime, the privatization level under Bertrand competition is always larger. We also find that under discriminatory pricing regime, the Cournot-Bertrand ranking of other relevant variables are sensitive to the degree of substitutability.
    Keywords: D4, D6, H4, L1, L2
    JEL: L1 L2
    Date: 2022–09–15
  5. By: Ronen Gradwohl; Moshe Tennenholtz
    Abstract: We study the costs and benefits of selling data to a competitor. Although selling all consumers' data may decrease total firm profits, there exist other selling mechanisms -- in which only some consumers' data is sold -- that render both firms better off. We identify the profit-maximizing mechanism, and show that the benefit to firms comes at a cost to consumers. We then construct Pareto-improving mechanisms, in which each consumers' welfare, as well as both firms' profits, increase. Finally, we show that consumer opt-in can serve as an instrument to induce firms to choose a Pareto-improving mechanism over a profit-maximizing one.
    Date: 2023–02
  6. By: Olayinka Oyekola (Department of Economics, University of Exeter); Samuel Odewunmi (Department of Economics, University of Exeter)
    Abstract: Does the level of societal secrecy aggravate or alleviate access to finance? We explore this question for over 50, 000 firms in around 40, predominantly developing, countries, from 2006 to 2015. We find a strong positive relationship between cultural orientation towards secrecy in a country and financial constraints faced by its firms. Our results are robust to several considerations and emphasise the adverse consequence of societal secrecy for perpetuating financing obstacles for firms.
    Keywords: financial constraints, access to credit, societal secrecy, national culture, firm-level data
    JEL: G20 G30 O16 Z1
    Date: 2023–02–21
  7. By: Buchali, Katrin; Grüb, Jens; Muijs, Matthias; Schwalbe, Ulrich
    Abstract: Recent experimental simulations have shown that autonomous pricing algorithms are able to learn collusive behavior and thus charge supra-competitive prices without being explicitly programmed to do so. These simulations assume, however, that both firms employ the identical price-setting algorithm based on Q-learning. Thus, the question arises whether the underlying assumption that both firms employ a Q-learning algorithm can be supported as an equilibrium in a game where firms can chose between different pricing rules. Our simulations show that when both firms use a learning algorithm, the outcome is not an equilibrium when alternative price setting rules are available. In fact, simpler price setting rules as for example meeting competition clauses yield higher payoffs compared to Q-learning algorithms.
    Keywords: pricing algorithms, algorithmic collusion, reinforcement learning
    JEL: D43 D83 L13 L49
    Date: 2023
  8. By: Kanit Sangsubhan; Kumpon Pornpattanapaisankul; Pisacha Kambuya
    Abstract: Rapid advances in the automation technology have led to a rise of public interest among researchers and policy makers. In manufacturing, most papers proved that industrial robots and automation is a key enabler to improve firm’s competitiveness and the overall growth of country. However, the often referred to picture of this new technology as “job killers†caused by the decoupling of wages and output per worker. Using Thai manufacturing firm-level data, this paper provides empirical evidence that there is a positive relationship between firms adopting automated process and their TFP. However, being in EEC area shows mixed results. We also find that automation investment has positive significant effect on total employment. Furthermore, there is some evidence that automation is driving an increase in demand for skilled workers and has reduced unskilled activities.
    Keywords: Automation; Robots; Total factor productivity; Labor productivity; Employment; Skills; Firm investment
    JEL: D24 E24 O14 O33
    Date: 2023–02

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