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on Industrial Competition |
| By: | Jeroen Hinloopen (University of Amsterdam); Grega Smrkolj (University of Amsterdam); Florian Wagener (University of Amsterdam) |
| Abstract: | We examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. For that we utilize a dynamic model of R&D whereby we consider all possible initial marginal cost levels (technologies), including those that exceed the choke price. This global analysis yields four possibilities: initial marginal costs are above the choke price and this technology is, or is not, developed further, and initial marginal costs are below the choke price and the technology is, or is not, (eventually) taken off the market. We show that an extension of the cooperative agreement towards collusion in the product market is not necessarily welfare reducing: if firms collude, they (i) develop further a wider range of initial technologies, (ii) invest more in R&D such that process innovations are pursued more quickly, and (iii) abandon the technology for a smaller set of initial marginal costs. We also dis cuss the implications of our analysis for antitrust policy. |
| Keywords: | Antitrust policy; Bifurcations; Collusion; R&D cooperatives; Spillovers |
| JEL: | D43 D92 L13 L41 O31 O38 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130045&r=com |
| By: | Michael Peneder (WIFO); Martin Wörter |
| Abstract: | To address the relationship between innovation and competition we jointly estimate the opportunity, production, and impact functions of innovation in a simultaneous system. Based on Swiss micro-data, we apply a 3-SLS system estimation. The findings confirm a robust inverted-U relationship, in which a rise in the number of competitors at low levels of initial competition increases the firm's research effort, but at a diminishing rate, and the research effort ultimately decreases at high levels of competition. When we split the sample by firm types, the inverted-U shape is steeper for creative firms than for adaptive ones. The numerical solution indicates three particular configurations of interest: 1. an uncontested monopoly with low innovation, 2. low competition with high innovation, and 3. a "no innovation trap" at very high levels of competition. The distinction between solution 1. and 2. corresponds to Arrow's positive effect of competition on innovation, whereas the difference between outcomes 2. and 3. captures Schumpeter's positive effect of market power on innovation. Simulating changes of the exogenous variables, technology potential, demand growth, firm size and exports have a positive impact on innovation, while foreign ownership has a negative effect, and higher appropriability has a positive impact on the number of competitors. |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2013:i:448&r=com |
| By: | Isabel Tecu |
| Abstract: | What explains the location of industrial innovation? Economists have traditionally attempted to answer this question by studying firm-external knowledge spillovers. This paper shows that firm-internal linkages between production and R&D play an equally important role. I estimate an R&D location choice model that predicts patents by a firm in a location from R&D productivity and costs. Focusing on large R&D-performing firms in the chemical industry, an average-sized plant raises the firm’s R&D productivity in the metropolitan area by about 2.5 times. The elasticity of R&D productivity with respect to the firm’s production workers is almost as large as the elasticity with respect to total patents in the MSA, while proximity to academic R&D has no significant effect on R&D productivity in this sample. Other manufacturing industries exhibit similar results. My results cast doubt on the frequently-held view that a country can divest itself of manufacturing and specialize in innovation alone. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-09&r=com |
| By: | Heimeshoff, Ulrich; Klein, Gordon J. |
| Abstract: | Bargaining Power of retailers is an important aspect of discourse in many industrialized countries, including Germany, Portugal, the UK, and the USA. In Germany the Federal Cartel Office argues that strong bargaining power of retailers presents danger for workable competition in the market. Furthermore, significant bargaining power on the retailer side is often assumed a priori without further investigation. Based on a treatment effect study using difference-in-differences techniques we show, that even small suppliers can have superior bargaining power against retailers depending on their shares on local markets. We do not argue that retailers have no bargaining power at all, but we want to show, that the division of bargaining power between the two sides of the markets varies from product to product and is also a dynamic phenomenon which changes over time. As a result, the a priori assumption of bargaining power of retailers can be very misleading. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:87&r=com |
| By: | Szalay, Dezsö |
| Abstract: | I study the optimal regulation of a firm producing two goods. The firm has private information about its cost of producing either of the goods. I explore the ways in which the optimal allocation differs from its one dimensional counterpart. With binding constraints in both dimensions, the allocation involves distortions for the most efficient producers and features overproduction for some less efficient types. |
| JEL: | D82 L21 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:397&r=com |
| By: | Antoine Gervais |
| Abstract: | I develop and implement a methodology for obtaining plant-level estimates of product quality from revenue and physical output data. Intuitively, firms that sell large quantities of output conditional on price are classified as high quality producers. I use this method to decompose cross-plant variation in price and export status into a quality and an efficiency margin. The empirical results show that prices are increasing in quality and decreasing in efficiency. However, selection into exporting is driven mainly by quality. The finding that changes in quality and efficiency have different impact on the firm's export decision is shown to be inconsistent with the traditional iceberg trade cost formulation and points to the importance of per unit transport costs. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-08&r=com |
| By: | PRISECARU, Paul (Consiliul Concurentei) |
| Abstract: | One of the least studied aspects of antitrust law and economics is the effectiveness of public sanctions in deterring anticompetitive behavior. Recent studies regarding overcharges in cartel cases have demonstrated that the classic ”maximum 10% of annual turnover” fine may have only remote efficiency. Comparatively, cartels are in place more that a year and usually generate profits in excess of 10% of annual turnover. Moreover, empirical evidence demonstrates that jurisdictions where criminal penalties are used against individuals involved in antitrust cases, such as United States, are more efficient in deterring the use of anticompetitive behavior to enhance profits. Although, in recent years antitrust fines have been growing significantly, competition policy in Romania remains weak, based on empirical evidence from two of the most important cases enforced by the Romanian Competition Council. |
| Keywords: | antitrust, sanctions, effectiveness, fines, prices, cartel, overcharge |
| JEL: | K2 L4 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ror:seince:130221&r=com |