nep-com New Economics Papers
on Industrial Competition
Issue of 2016‒04‒23
28 papers chosen by
Russell Pittman
United States Department of Justice

  1. The value of incumbency in heterogeneous platforms By Biglaiser, Gary; Crémer, Jacques
  2. You Are Judged by the Company You Keep: Reputation Leverage in Vertically Related Markets By Choi, Jay-Pil; Peitz, Martin
  3. Dynamic Competition with Network Externalities: Why History Matters By Halaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron
  4. Screening and adverse selection in frictional markets By Lester, Benjamin; Shourideh, Ali; Venkateswaran, Venky; Zetlin-Jones, Ariel
  5. Assessment of Post-merger Coordinated Effects: Characterization by Simulations By Ivaldi, Marc; Lagos, Vicente
  6. Unilateral Effects Screens for Partial Horizontal Acquisitions: The Generalized HHI and GUPPI By Brito, Duarte; Osório, António (António Miguel); Ribeiro, Ricardo; Vasconcelos, Helder
  7. Rent sharing to control non-cartel supply in the German cement market By Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich
  8. Collusion with a Greedy Center in Position Auctions By Emmanuel LORENZON
  9. Imperfect Cartelization in OPEC By Okullo, Samuel; Reynes, F.
  10. Price-Setting Behavior in Brazil: survey evidence By Arnildo da Silva Correa; Myrian Beatriz S. Petrassi; Rafael Santos
  11. Strategic Differentiation by Business Models: Free-to-Air and Pay-TV By Emilio Calvano; Mihele Polo
  12. Quality competition and hospital mergers: An experiment By Han, Johann; Kairies-Schwarz, Nadja; Vomhof, Markus
  13. Innovation in air transport market: impact on competitors strategies By Isabelle Laplace; Chantal Latgé-Roucolle; Ion Buzdugan
  14. Has the Restructuring of EU Electricity Markets Reduced Industrial Electricity Prices? By Hyland, Marie
  15. Energy Price Transmission and Retail Milk Prices By Li, Xun; Lopez, Rigoberto A.
  16. Precontractual Investment and Modes of Procurement By Alessandro De Chiara
  17. Can Currency Competition Work? By Jesús Fernández-Villaverde; Daniel Sanches
  18. Competition makes IT better : evidence on when firms use it more effectively By Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
  19. Production Networks, Geography, and Firm Performance By Andrew B. BERNARD; Andreas MOXNES; SAITO Yukiko
  20. The differentiated impacts of organizational innovation practices on technological innovation persistence By Christian Le Bas; Caroline Mothe; Thuc Uyen Nguyen-Thi
  21. Innovation, Competition and Productivity. Firm Level Evidence for Eastern Europe and Central Asia By Klaus S. Friesenbichler; Michael Peneder
  22. Sourcing Innovation: probing Technology Readiness Levels with a design framework By Fabien Jean; Pascal Le Masson; Benoit Weil
  23. Public Support to Innovation Strategies By Laura Barbieri; Daniela Bragoli; Flavia Cortelezzi; Giovanni Marseguerra
  24. New Firms and Post-Entry Performance: The Role of Innovation. By Colombelli, Alessandra; Krafft, Jackie; Vivarelli, Marco
  25. Assessing complementarity in organizational innovations for technological innovation: the role of knowledge management practices By Caroline Mothe; Uyen Nguyen-Thi; Phu Nguyen Van
  26. Networks of Enterprises and Innovations: Evidence from SMEs in Vietnam By Doan, Quang Hung; Vu, Hoang Nam
  27. Determinants of Industrial Coagglomeration and Establishment-level Productivity By Fujii, Daisuke; Nakajima, Kentaro; Saito, Yukiko Umeno
  28. Boosting competition on Israeli markets By Claude Giorno

  1. By: Biglaiser, Gary; Crémer, Jacques
    Abstract: We study the dynamics of competition in a model with network effects, an incumbent and entry. We propose a new way of representing the strategic advantages of incumbency in a static model. We then embed this static analysis in a dynamic framework with heterogeneous consumers. We completely identify the conditions under which inefficient equilibria with two platforms will emerge at equilibrium; explore the reasons why these inefficient equilibria arise; and compute the profits of the incumbent when there is only one platform at equilibrium.
    Keywords: network effects; network externalities; plaforms
    JEL: L12 L13 L86
    Date: 2016–03
  2. By: Choi, Jay-Pil; Peitz, Martin
    Abstract: This paper analyzes a mechanism through which a supplier of unknown quality can overcome its asymmetric information problem by selling via a reputable downstream firm. The supplier's adverse-selection problem can be solved if the downstream firm has established a reputation for delivering high quality vis-à-vis the supplier. The supplier may enter the market by initially renting the downstream firm’s reputation. The downstream firm may optimally source its input externally, even though sourcing internally would be better in terms of productive efficiency. Since an entrant in the downstream market may lack reputation, it may suffer from a reputational barrier to entry arising from higher input costs.
    Keywords: Adverse Selection; Barriers to Entry; Branding; Certification Intermediaries; Experience Goods; Incumbency Advantage; Outsourcing
    JEL: D4 L12 L4 L43 L51 L52
    Date: 2016–04
  3. By: Halaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron
    Abstract: We consider dynamic competition among platforms in a market with network externalities. A platform that dominated the market in the previous period becomes "focal"; in the current period, in that agents play the equilibrium in which they adopt the focal platform whenever such equilibrium exists. Yet when faced with higher-quality competition, can a low-quality platform remain focal? In the finite-horizon case, the unique equilibrium is efficient for "patient" platforms; with an infinite time horizon, however, there are multiple equilibria where either the low- or high-quality platform dominates. If qualities are stochastic, the platform with a better average quality wins with a higher probability, even when its realized quality is lower, and this probability increases as platforms become more patient. Hence social welfare may decline as platforms become more forward looking.
    Keywords: coordination; dynamic competition; network externalities
    JEL: L1
    Date: 2016–03
  4. By: Lester, Benjamin (Federal Reserve Bank of Philadelphia); Shourideh, Ali (The Wharton School of the University of Pennsylvania); Venkateswaran, Venky (NYU–Stern School of Business); Zetlin-Jones, Ariel (Carnegi Mellon University)
    Abstract: We incorporate a search-theoretic model of imperfect competition into an otherwise standard model of asymmetric information with unrestricted contracts. We develop a methodology that allows for a sharp analytical characterization of the unique equilibrium and then use this characterization to explore the interaction between adverse selection, screening, and imperfect competition. On the positive side, we show how the structure of equilibrium contracts—and, hence, the relationship between an agent’s type, the quantity he trades, and the corresponding price—is jointly determined by the severity of adverse selection and the concentration of market power. This suggests that quantifying the effects of adverse selection requires controlling for the market structure. On the normative side, we show that increasing competition and reducing informational asymmetries can be detrimental to welfare. This suggests that recent attempts to increase competition and reduce opacity in markets that suffer from adverse selection could potentially have negative, unforeseen consequences
    Keywords: Adverse selection; Imperfect competition; Screening; Transparency; Search theory
    JEL: D41 D42 D43 D82 D83 D86 L13
    Date: 2016–03–10
  5. By: Ivaldi, Marc; Lagos, Vicente
    Abstract: This paper aims at evaluating the coordinated effects of horizontal mergers by simulating their impact on firms' critical discount factors. We consider a random coefficient model on the demand side and heterogeneous price-setting firms on the supply side. Results suggest that mergers strengthen the incentives to collude among merging parties, but weaken the incentives of non-merging parties, with the former effect being stronger. To assess the magnitudes of these effects, we introduce the concepts of Asymmetry in Payoffs and Change in Payoffs effects, which allow us to identify appropriate screening tools according to the relative pre-merger payoffs of merging parties.
    Keywords: Collusion; Coordinated effects; Critical Discount Factor; Merger Simulation
    JEL: L41
    Date: 2016–04
  6. By: Brito, Duarte; Osório, António (António Miguel); Ribeiro, Ricardo; Vasconcelos, Helder
    Abstract: Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose a generalization to a partial horizontal acquisition setting of the two most traditional indicators used to screen unilateral anti-competitive effects: the Helfindahl- Hirschman Index and the Gross Upward Price Pressure Index. The proposed generalized indicators can deal with all types of acquisitions that may lessen competition in the industry: acquisitions by owners that are internal to the industry (rival firms) and engage in cross-ownership, as well as acquisitions by owners that are external to the industry and engage in common-ownership. Furthermore, these indicators can deal with direct and indirect acquisitions, which may or may not correspond to control, and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry. The results seem to suggest that (i) a full merger induces higher unilateral anti-competitive effects than a partial controlling acquisition involving the same firms, (ii) a partial controlling acquisition induces higher unilateral anti-competitive effects than a partial non-controlling acquisition involving the same firms and the same financial stakes, and (iii) an acquisition by owners that are internal to the industry induces higher unilateral anti-competitive effects than an acquisition (involving the same firms and the same stakes) by external owners that participate in more than one competitor firm. JEL Classification: L13, L41, L66 Keywords: Antitrust, Partial Horizontal Acquisitions, Oligopoly, Screening Indicators, HHI, GUPPI
    Keywords: Oligopolis, Monopolis, 33 - Economia,
    Date: 2015
  7. By: Harrington, Joseph E.; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: A challenge for many cartels is avoiding a destabilizing increase in non-cartel supply in response to having raised price. In the case of the German cement cartel that operated over 1991-2002, the primary source of non-cartel supply was imports from Eastern European cement manufacturers. Industry sources have claimed that the cartel sought to control imports by sharing rents with intermediaries in order to discourage them from sourcing foreign supply. Specifically, cartel members would allow an intermediary to issue the invoice for a transaction and charge a fee even though the output went directly from the cartel member's plant to the customer. We investigate this claim by first developing a theory of collusive pricing that takes account of the option of bribing intermediaries. The theory predicts that the cement cartel members are more likely to share rents with an intermediary when the nearest Eastern European plant is closer and there is more Eastern European capacity outside of the control of the cartel. Estimating a logit model that predicts when a cartel member sells through an intermediary, the empirical analysis supports both predictions.
    Keywords: collusion,cartel,non-cartel supply,cement,distribution channels,intermediary
    JEL: L41 K21
    Date: 2016
  8. By: Emmanuel LORENZON
    Abstract: In this paper we aim at studying the sensitivity of the Generalized Second-Price auction to bidder collusion when monetary transfers are allowed. We propose a model of position auction that incorporates third-parties as agents facilitating collusion in complete information. We show that the first-best collusive outcome can be achieved under any Nash condition. Under the locally envy-free criterion, we find that if the collusive gain is uniformly redistributed among members, the best that can be achieved is Vickrey-Clarkes-Groves outcome. Bidders do not have sufficient incentives to reduce even more their expressed demand. We then provide elements upon which an incentive compatible fee can be set by the center. We provide conditions under which bidders can enhance efficient collusion. Doing so we also contribute to the literature on collusion in multiple-objects simultaneous auctions.
    Keywords: Auctions, Online advertising, Position auctions; Bidding ring, Cartel
    JEL: D44 C72 M3 L41
    Date: 2016
  9. By: Okullo, Samuel (Tilburg University, Center For Economic Research); Reynes, F.
    Abstract: A model of global oil production is applied to study cartelization by OPEC countries. Writing out the shadow price on quota allocations so as to draw correspondence to coefficients of cooperation (Cyert et al. 1973), we examine the incentives that different OPEC members to collude. We find that heterogeneity in OPEC and the supplies of the non-OPEC fringe create strong incentives against OPEC cooperation. OPEC’s optimal supply strategy although observed to be substantially more restrictive than that of a Cournot-Nash oligopoly, is found to still be more accommodative than that of a perfect cartel. The strategy involves allocating larger than proportionate quotas to smaller and relatively costlier producers as if to bribe their participation in the cartel. This is contrary to predictions of the standard cartel model that such producers should be allocated relatively more stringent quotas. Furthermore, we find that cartel collusion is likely to be sustained for elastic than inelastic demand. Since global oil demand is well known to be inelastic, this observation provides another structural explanation for why OPEC behavior is inconsistent with that of a perfect cartel. Our study points to multiple headwinds that limit OPECs ability to raise long-run global oil prices.
    Keywords: imperfect cartels; oil; OPEC; Nash bargaining; cullusion strategies
    JEL: C61 C7 L13 L22 L71 Q31
    Date: 2016
  10. By: Arnildo da Silva Correa; Myrian Beatriz S. Petrassi; Rafael Santos
    Abstract: Price surveys became popular after the seminal work of Blinder (1991) exploring the price-setting practices of the US firms, which filled some blanks left by the simple observation of prices charged by firms. The present paper reports the findings of a survey conducted by the Central Bank of Brazil with local firms. The sample covered 7,002 firms, the entire country and 3 economic sectors: manufacturing, services and commerce. The collected answers suggest important features about price-setting behavior in Brazil, such as: (i) the cost of reviewing price are low, but there is important nominal rigidity – firms report that change prices 3.6 times per year –, (ii) state-dependent rules seem to be more frequent than time-dependent behavior, (iii) markup pricing appears to be the dominant strategy, and (iv) the two most important factors driving price changes are the cost of intermediate goods and the inflation rate. A complete description of the results is found throughout the paper and summarized in the final section. The paper also discusses some policy implications from the results
    Date: 2016–03
  11. By: Emilio Calvano (Università di Bologna and CSEF); Mihele Polo (Bocconi University, IEFE and IGIER)
    Abstract: Free-to-air and Pay-TV business models usually cohabit in broadcasting (and more generally in media) markets. We analyze a model in which two identical broadcasting stations compete for viewers and for advertisers. Differentiation by business model arises endogenously in equilibrium. A merger to monopoly maintains differentiation and comes with strings attached. Monopoly power leads to excessive subscription prices, changes the overall provision of advertising and induces an allocative inefficiency of advertising messages across stations. We therefore argue that the prevailing antitrust and regulatory practice of classifying FTA and Pay-TV operators in different relevant markets is misguided.
    Date: 2016–04–16
  12. By: Han, Johann; Kairies-Schwarz, Nadja; Vomhof, Markus
    Abstract: Based on a Salop model with regulated prices, we investigate quality provision behavior of competing hospitals before and after a merger. For this, we use a controlled laboratory experiment where subjects decide on the level of treatment quality as head of a hospital. We find that the post-merger average quality is significantly lower than the average pre-merger quality. However, for merger insiders and outsiders, average quality choices are significantly higher than predicted for pure profit maximizing hospitals. We show that the upward deviation is potentially driven by altruistic behavior towards patients. Furthermore, we fi nd that in case sufficient cost synergies are realized by the merged hospitals, this yields a significant increase in average quality choices compared to the scenario without synergies. Finally, we find that our results do not change when comparing individual to team decisions.
    Abstract: Auf Grundlage eines Salop-Modells mit regulierten Preisen wird in dieser Arbeit das Qualitätssetzungsverhalten konkurrierender Krankenhäuser vor und nach einer Fusion untersucht. Hierfür wird ein kontrolliertes Laborexperiment verwendet, in welchem die Probanden in der Rolle eines Leiters eines Krankenhauses über die Behandlungsqualität entscheiden. Dabei finden wir nach der Fusion einen signifikanten Rückgang in der durchschnittlichen Höhe der bereitgestellten Qualität im Vergleich zur Wettbewerbssituation vor der Fusion. Jedoch setzen die Markakteure nach der Fusion - unabhängig davon, ob sie zu den fusionierten Krankenhäusern gehören oder als allein operierendes Krankenhaus agieren - durchschnittlich eine signifikant höhere Marktqualität als die für profitmaximierende Krankenhäuser vorhersagte. Wir zeigen, dass man diese Abweichung nach oben auf altruistische Motive gegenüber den Patienten zurückführen kann. Des Weiteren finden wir in einem Vergleichsszenario mit hinreichend starken Kostensynergien auf Seiten der fusionierten Krankenhäuser signifikant höhere Qualitäten als im Fall ohne Kostensynergien. Unsere Resultate bleiben auch robust, wenn Gruppenentscheidungen statt Individualentscheidungen betrachtet werden.
    Keywords: hospital mergers,quality competition,altruism,laboratory experiment
    JEL: C91 C92 I11 L13 L44
    Date: 2016
  13. By: Isabelle Laplace (ENAC - Ecole Nationale de l'Aviation Civile - ENAC); Chantal Latgé-Roucolle (LEEA - ENAC - Laboratoire d'Economie et d'Econométrie de l'Aérien - PRES Université de Toulouse - Ecole Nationale de l'Aviation Civile); Ion Buzdugan (UT1 - Université Toulouse 1 Capitole)
    Abstract: The objective of this empirical paper is to analyze the impact of an innovation in air transport system on airlines competitive behavior. We consider as innovation, the use of an aircraft with a significant higher capacity: the Airbus 380. Does the use of the A380 by an airline on a particular route give incentives to competitors to introduce as well this type on aircraft on the same route? To answer this question we use some econometric methods to estimate the impact of the introduction of the A380 by an airline, on the probability that airline’s competitors will follow up the innovation. Controlling for others factors which might impact the choice of innovation, we show that the use of the A380 by an airline on a route gives incentives to competitors to introduce it as well
    Keywords: Air transport,aircraft innovation,aircraft size,airlines,competitive strategies
    Date: 2016–04–12
  14. By: Hyland, Marie
    Date: 2016–01
  15. By: Li, Xun (University of Connecticut); Lopez, Rigoberto A.
    Abstract: This paper estimates the pass-through between diesel fuel and retail milk prices at the product brand level, based on a random coefficient logit demand model along with a market channel marginal cost function in order to estimate energy price pass-through rates to the consumer. It takes into account the partial and net impact of energy prices through the multi-market effects on other inputs. It also exploits a natural experiment of energy hyperinflation and the great recession in 2008. Empirical results show that energy prices (e.g., diesel price) significantly impact the retail prices of milk products and are, therefore, an important determinant of food price inflation. Pass-through rates are estimated to be in the range from 0.15 to approximately 0.50 before March 2008 and from 0.09 to 0.19 after March 2009, with an average of 0.26. This indicates that a $1.00 per gallon increase in diesel prices would on average result in a 26¢ per gallon increase in the retail price of milk.
    Keywords: food, milk, energy, pricing, pass-through
    Date: 2015–07
  16. By: Alessandro De Chiara
    Keywords: auctions; design failure; negotiations; precontractual investment; private procurement; relational contracts
    Date: 2015–06
  17. By: Jesús Fernández-Villaverde; Daniel Sanches
    Abstract: Can competition among privately issued fiat currencies such as Bitcoin or Ethereum work? Only sometimes. To show this, we build a model of competition among privately issued fiat currencies. We modify the current workhorse of monetary economics, the Lagos-Wright environment, by including entrepreneurs who can issue their own fiat currencies in order to maximize their utility. Otherwise, the model is standard. We show that there exists an equilibrium in which price stability is consistent with competing private monies, but also that there exists a continuum of equilibrium trajectories with the property that the value of private currencies monotonically converges to zero. These latter equilibria disappear, however, when we introduce productive capital. We also investigate the properties of hybrid monetary arrangements with private and government monies, of automata issuing money, and the role of network effects.
    JEL: E40 E42 E52
    Date: 2016–04
  18. By: Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
    Abstract: This paper uses a unique firm-level data set for Mexico, with information never used for research before, to assess how use of information technology (IT henceforth) influences firm performance. Further, the paper explores if, in the context of increasing competition from China, this effect is different for firms more strongly affected by competition where incentives for upgrading and innovation may be more intense. In this perspective, the paper analyzes the complementarity between IT and other changes spurred by competition, taking advantage of the exogenous shock generated by Chinese competition. The results indicate that IT use has higher effects over productivity in the case of firms facing higher competition from China, in the domestic market and in the U.S. market. Furthermore, the paper shows how these changes appear to be driven by complementary investments in innovation and organizational changes.
    Keywords: E-Business,ICT Policy and Strategies,Technology Industry,Labor Policies,Knowledge for Development
    Date: 2016–04–13
  19. By: Andrew B. BERNARD; Andreas MOXNES; SAITO Yukiko
    Abstract: This paper examines the importance of buyer-supplier relationships, geography, and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down firms' marginal production costs. We test the theory by exploiting the opening of a high-speed train line (shinkansen) in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, which are consistent with the model.
    Date: 2016–03
  20. By: Christian Le Bas (ESDES - École de management de Lyon - Université Catholique de Lyon); Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Thuc Uyen Nguyen-Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development)
    Abstract: This article tests the major determinants of technological (product and process) innovation persistence and provides evidence of the significant role of organizational innovation. Design/methodology/approach Data came from two waves of the Luxembourg Community Innovation Survey (CIS): CIS2006 for 2004–2006 and CIS2008 for 2006–2008. The longitudinal data set resulted in a final sample of 287 firms. A multinomial probit model estimates the likelihood that each firm belongs to one of three longitudinal innovation profiles: no, sporadic, or persistent innovators. Findings The determinants have differentiated impacts on process and technological innovation persistence. Organizational innovation influences technological innovation persistence. In the analysis of detailed organizational practices, strong evidence emerged that knowledge management exerts a crucial effect on product innovation persistence; workplace organization instead is associated with process innovation persistence.
    Keywords: R&D,persistence,innovation,Technological innovation,organizational innovation
    Date: 2015
  21. By: Klaus S. Friesenbichler (WIFO); Michael Peneder (WIFO)
    Abstract: We investigate the drivers of firm level productivity in catching-up economies by jointly estimating its relationship to innovation and competition using data from the EBRD-WB Business Environment and Enterprise Performance Survey (BEEPS) in Eastern Europe and Central Asia. The findings confirm an inverted-U shaped impact of competition on R&D. Both competition and innovation have a simultaneous positive effect on labour productivity in terms of either sales or value added per employee, as does a high share of university graduates and foreign ownership. Further positive impacts come from firm size, exports, or population density. Innovation and foreign ownership appear to be the strongest drivers of multifactor productivity.
    Keywords: innovation, competition, productivity, development, transition economies, simultaneous system
    Date: 2016–04–13
  22. By: Fabien Jean (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Supplier-buyer exchanges are well addressed in literature except in the case of unknown objects. Sourcing Innovation, i.e. the process of finding external sources of innovation and then bringing those innovations into the firm should transform incoming unknown objects to ascribe them value. Technology Readiness Levels (TRL) have formalised the unknown in supplier-buyer exchanges in many industries for forty years but there is no evidence that they enable that transformation. We then use design theories, i.e. the Technology-Environment framework, to probe TRL through analysing ten cases combining documents analyses and longitudinal studies. We found that TRL avoid fixating on a low mature technology and are not an obstacle at genericity; however they fixate when the buyer waits a certain TRL prior exploring the new technology value. Finally TRL are unable to guide designers towards generativity notably because they embrace a definition of Environment focused on the prototyping method.
    Keywords: generativity,supplier-buyer exchanges, Technology-Environment framework, design theory, innovation theory, fixation
    Date: 2015–11–09
  23. By: Laura Barbieri (Dipartimento di Scienze Economiche e Sociali, Università Cattolica); Daniela Bragoli (Dipartimento di Discipline matematiche, Finanza matematica ed Econometria, Università Cattolica); Flavia Cortelezzi (Dipartimento di Diritto, Economia e Culture, Università degli Studi dell’Insubria); Giovanni Marseguerra (Dipartimento di Discipline matematiche, Finanza matematica ed Econometria, Università Cattolica)
    Abstract: This study investigates whether the receipt of public R&D funding determines firm's R&D strategy election. Using the Community Innovation Survey (CIS) dataset including more than 3000 Italian manufacturing companies, we adopt a multinomial logit model after controlling for sample selection and endogeneity issues which arise when dealing with CIS data. The main finding is that public R&D funding in uences whether firms select the make, the buy or the make&buy strategy and in particular firms, after receiving public support, prefer the composite strategy rather than the single strategies. This result turns out to be good news given that government support, correcting for the market failures which characterize the combined strategy, favors the strategy which seems to enhance a positive synergy between in house R&D and external sourcing.
    Keywords: Public Funding, R&D strategies, CIS Survey
    JEL: G32 O31 D21
    Date: 2015–12
  24. By: Colombelli, Alessandra; Krafft, Jackie; Vivarelli, Marco (University of Turin)
    Abstract: This paper investigates the reasons why entry per se is not necessarily good and the evidence showing that innovative startups survive longer than their non-innovative counterparts. In this framework, our own empirical analysis shows that greater survival is achieved when startups engage successfully in both product innovation and process innovation, with a key role of the latter. Moreover, this study goes beyond a purely microeconomic perspective and discusses the key role of the environment within which innovative entries occur. What shown and discussed in this contribution strongly supports the proposal that the creation and survival of innovative start-ups should become one qualifying point of the economic policy agenda.
    Date: 2016–03
  25. By: Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Uyen Nguyen-Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development); Phu Nguyen Van (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We here empirically investigate the pattern of complementarity between four organizational practices. Firm-level data were drawn from the Community Innovation Survey (CIS) carried out in 2008 in Luxembourg. Supermodularity tests confirm the crucial role of organizational innovation in raising firms’ technological innovation. The pattern of complementarity between organizational practices differs according to the type of innovation, i.e. product or process innovation, but also according to whether the firm is in the first stage of the innovation process (i.e. being innovative or not) or in a later stage (i.e. innovation performance in terms of sales of new products).
    Keywords: Supermodularity, Technological innovation,Complementarity, Organizational innovation, Substitution
    Date: 2015
  26. By: Doan, Quang Hung; Vu, Hoang Nam
    Abstract: By using the latest dataset from the survey of SMEs conducted in Vietnam in 2011, we show that a firm both participating in a wider network of input suppliers, buyers, and associations of enterprises and conducting innovative activities in production has higher labor productivity than others, implying that networks of enterprises and innovation are complementary to each other in affecting performance of SMEs in Vietnam. We also find that supports of the government including providing better infrastructure to the SMEs and helping the SMEs to be formalized when being established are conducive to the development of the SMEs in Vietnam.
    Keywords: Complementary, supermodularity, Network, Innovation, SMEs.
    JEL: D58 O3
    Date: 2016–01
  27. By: Fujii, Daisuke; Nakajima, Kentaro; Saito, Yukiko Umeno
    Abstract: This paper investigates the relationships between determinants of industrial coagglomeration and establishment-level productivity. For each pair of industries, we first construct degree of coagglomeration and indices for three factors of coagglomeration: inter-firm transactions, knowledge spillover, and labor market pooling. We then examine correlation between these three factors and degree of coagglomeration. Overall, inter-firm transactions and labor market pooling are positively correlated with the degree of coagglomeration whereas knowledge spillover has no significant relationship with coagglomeration. We also find that determinants of coagglomeration are quite different across industries. Further, we examine relationships between these factors and establishment-level productivity. In the results, we find that determinants of coagglomeration are not necessarily positively associated with productivity of establishments.
    Keywords: coagglomeration, transaction costs, knowledge spillover, labor pooling
    JEL: R11
    Date: 2016–03
  28. By: Claude Giorno
    Abstract: Promoting competition to enhance productivity at the firm level and resulting income and growth improvement and a lower cost of living is an important economic and social challenge in Israel. Consistent evidence shows multiple deficiencies leading to a dual functioning of the economy between exposed and sheltered sectors. Product markets are hampered by regulations that are far from best practice. Because of its geographical and geopolitical situation, Israel is less open to foreign trade than other small OECD countries. Moreover, its product markets feature monopolies in many sectors. Addressing these issues have been high on the policy agenda since the 2011 “tent protests”, and the authorities have adopted or launched reforms in many domains since then. However, further increases in foreign trade exposure by lowering non-tariff barriers, making regulation more competition-friendly in network industries, especially electricity, and reducing the oligopolistic structure of the food and banking sectors would still have considerable economic payoffs.This Working Paper relates to the 2016 OECD Economic Review of Israel ( israel.htm). Stimuler la concurrence sur les marchés israéliens Promouvoir la concurrence pour accroître la productivité dans les entreprises et les gains en résultant pour les revenus et la croissance et abaisser le coût de la vie constitue un enjeu économique et social de taille pour Israël. Certains éléments concordants montrent de multiples déficiences qui mènent à un fonctionnement dual de l’économie, partagée entre secteurs exposés à la concurrence internationale et ceux qui en sont protégés. Les marchés de produits sont entravés par des réglementations qui sont loin de constituer des exemples de bonnes pratiques. De par sa situation géographique et géopolitique, Israël est une économie moins ouverte aux échanges internationaux que d’autres petites économies de l’OCDE. Qui plus est, ses marchés de produits se caractérisent par l’existence de monopoles dans de nombreux secteurs. Les autorités ont fait de ces questions une priorité depuis la « révolte des tentes » de 2011 et ont depuis lors adopté ou engagé des réformes dans de nombreux domaines. Toutefois, une plus forte exposition aux échanges internationaux via une réduction des obstacles non tarifaires, une réglementation plus favorable à la concurrence dans les industries de réseau, en particulier dans le secteur de l’électricité, et une organisation moins oligopolistique du marché de l’alimentation et du marché bancaire, serait grandement payante sur le plan économique. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Israël 2016 ( ique-israel.htm).
    Keywords: cartel, network industries, competition, parallel imports, agriculture, industries de réseaux, agriculture, importations parallèles, cartel, compétition
    JEL: K21 L66 L81 L87 L9 O47 Q18
    Date: 2016–04–12

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