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on Industrial Competition |
| By: | Carl-Christian Groh |
| Keywords: | search, information exchange, antitrust, price discrimination approach, German Competition Act, 19a designations, competition law I study the relationship between data and market power in a duopoly model of price discrimination with search frictions. One firm receives a signal about the valuation of any arriving consumer while its rival receives no information. A share of consumers, referred to as searchers, have equal valuation for the good of either firm and optimally choose which firms to visit. The remaining consumers are captive. In equilibrium, a large majority of searchers will only visit the firm with data. The market share of the firm with data converges to one as the share of searchers in the market goes to one, regardless of the signal structure. Reductions of search frictions induce higher market concentration. The establishment of a right to data portability can address the competitive imbalances caused by data advantages. |
| JEL: | D18 D83 L13 L86 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_383&r=com |
| By: | Elias Carroni (University of Bologna Author-Name: Leonardo Madio; University of Padova Author-Name: Shiva Shekhar; Tilburg University) |
| Abstract: | In most platform environments, the exclusive provision of premium content from leading creators (Superstars) is employed as a strategy to boost user participation and secure a competitive edge vis-Ã -vis rivals. In this article, we study the impact of Superstar exclusive content provi- sion on platform competition and complementors’ homing decisions. Two competing platforms facilitate interactions between consumers and suppliers, of which the latter are identified by the Superstar and a fringe of complementors (e.g., independent developers, amateurs). When platform competition is intense, more consumers become affiliated with the platform favored by Superstar exclusivity. This mechanism is self-reinforcing as it generates an entry cascade of complementors and some complementors singlehome on the favored platform. We find that cross-group externalities are key in shaping market outcomes. First, exclusivity benefits complementors and might make consumers better off when cross-group externalities are large enough. Second, contrary to con- ventional wisdom, vertical integration (platform-Superstar) may make exclusivity less likely than vertical separation under reasonable conditions. Finally, we discuss implications for the strategies of platform owners, managers of Superstars and complementors, and antitrust enforcers. |
| Keywords: | exclusivity, platforms, two-sided markets, vertical integration, network externalities. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0296&r=com |
| By: | Bruno Jullien (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Markus Reisinger; Patrick Rey |
| Abstract: | The availability of consumer data is inducing a growing number of firms to adopt more personalized pricing policies. This affects both the performance of, and the competition between, alternative distribution channels, which in turn has implications for firms' distribution strategies. We develop a formal model to examine a brand manufacturer's choice between mono distribution (selling only through its own direct channel) or dual distribution (selling through an independent retailer as well). We consider different demand patterns, covering both horizontal and vertical differentiation and different pricing regimes, with the manufacturer and retailer each charging personalized prices or a uniform price. We show that dual distribution is optimal for a large number of cases. In particular, this is always the case when the channels are horizontally differentiated, regardless of the pricing regime; moreover, if both firms charge personalized prices, a well-designed wholesale tariff allows them to extract the entire consumer surplus. These insights obtained here for the case of intrabrand competition between vertically related firms are thus in stark contrast to those obtained for interbrand competition, where personalized pricing dissipates industry profit. With vertical differentiation, dual distribution remains optimal if the manufacturer charges a uniform price. By contrast, under personalized pricing, mono distribution can be optimal when the retailer does not expand demand sufficiently. Interestingly, the industry profit may be largest in a hybrid pricing regime, in which the manufacturer forgoes the use of personalized pricing and only the retailer charges personalized prices. This paper was accepted by Joshua Gans, business strategy. |
| Date: | 2022–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03924406&r=com |
| By: | Tommy Staahl Gabrielsen (Department of Economics, University of Bergen); Bjørn Olav Johansen (Department of Economics, University of Bergen); Odd Rune Straume (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; and Department of Economics, University of Bergen, Norway) |
| Abstract: | We analyze theoretically the efficiency of structural remedies in merger control in retail markets and show that this crucially depends on the retail chains´pricing policy. Whereas a retail merger can be perfectly remedied by divestiture of stores under local pricing, such remedies are not only less effective, but might even be counterproductive, if the chains set national prices. Paradoxically, such remedies might be even more counterproductive if the chains also compete locally along non-price dimensions such as quality. Our analysis suggests that antitrust authorities should be very cautious when reviewing structural remedies in retail markets with national pricing. |
| Keywords: | Retail mergers; structural remedies; national pricing. |
| JEL: | L11 L22 L41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:10/2022&r=com |
| By: | Mertens, Matthias; Mottironi, Bernardo |
| Abstract: | Several models posit a positive cross-sectional correlation between markups and firm size, which, among others, characterizes misallocation, factor shares, and gains from trade. Yet, taking labor market power into account in markup estimation, we show that larger firms have lower markups. This correlation turns positive only after conditioning on wage markdowns, suggesting interactions between product and labor market power. Our findings are robust to common criticism (e.g., price bias) and hold across 19 European countries. We discuss the resulting implications and highlight studying input and output market power within an integrated framework as an important next step for future research. |
| Keywords: | firm size, markdowns, market power, markups |
| JEL: | J42 L11 L13 L25 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:12023&r=com |
| By: | Schlütter, Frank (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | This article investigates the incentive and ability of a platform to limit the extent of competition between the sellers it hosts. Absent contractual restrictions, a platform has an incentive to ensure competition between the sellers. This incentive can change with the introduction of so-called platform most-favored nation clauses (PMFN) that require the online sellers not to offer better conditions on other distribution channels. Such clauses can align the interests between sellers and platforms to restrict competition. I illustrate that a platform can stabilize seller collusion to its own benefit. These results offer a novel rationale to treat PMFNs with scrutiny. |
| Keywords: | Platform MFN ; digital economics ; collusion in vertically-related markets ; agency model |
| JEL: | L13 L40 L50 |
| Date: | 2022–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2022026&r=com |
| By: | Carl-Christian Groh; Marcel Preuss |
| Keywords: | Search, Information Exchange, Antitrust, Price Discrimination We study information sharing between competing sellers in markets where consumers sample sellers sequentially. Sellers can disclose to their rival when they encounter a buyer. Providing this information, which we call search disclosure, can enable all forms of search history-based price discrimination. Yet, firms only conduct search disclosure in equilibrium if search costs are low or price revisions are infeasible. The kind of search disclosure that can emerge in equilibrium leads to price discrimination that reduces consumer surplus and total welfare. However, if firms were mandated to use search disclosure at all times, consumer surplus would be higher. |
| JEL: | D18 D83 L13 L86 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_384&r=com |
| By: | Jens-Uwe Franck; Martin Peitz |
| Abstract: | The Bundeskartellamt has designated Alphabet, Meta, and Amazon as 19a firms. Thus, they are potentially subject to specific competition law interventions under a special procedure. In these three designation decisions, market definition plays an important role. This article points to several noteworthy aspects that concern market definition. In all decisions the authority focuses on one national market, arguing that the respective platform operator is dominant. The authority’s considerations are made at a somewhat aggregate level, abstracting from differences across market segments. |
| Keywords: | digital platforms, Big Tech, market definition, multi-markets approach, German Competition Act, 19a designations, competition law |
| JEL: | K21 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_386&r=com |
| By: | Lin William Cong; Simon Mayer |
| Abstract: | We model platform competition with endogenous data generation, collection, and sharing, thereby providing a unifying framework to evaluate data-related regulation and antitrust policies. Data are jointly produced from users' economic activities and platforms' investments in data infrastructure. Data improves service quality, causing a feedback loop that tends to concentrate market power. Dispersed users do not internalize the impact of their data contribution on (i) service quality for other users, (ii) market concentration, and (iii) platforms’ incentives to invest in data infrastructure, causing inefficient over- or under-collection of data. Data sharing proposals, user privacy protections, platform commitments, and markets for data cannot fully address these inefficiencies. We introduce and analyze user union, which represents and coordinates users, as a potential option for antitrust and consumer protection in the digital era. |
| JEL: | L10 L41 L50 O30 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30881&r=com |
| By: | Kurt R. Brekke (Norwegian School of Economics (NHH), Department of Economics); Dag Morten Dalen (BI Norwegian Business School); Odd Rune Straume (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; and Department of Economics, University of Bergen, Norway) |
| Abstract: | Health systems around world are increasingly adopting cost-effectiveness (CE) analysis to inform decisions about access and reimbursement. We study how CE thresholds imposed by a health plan for granting reimbursement affect drug producers´ pricing incentives and patients´access to new drugs. Analysing a sequential pricing game between an incumbent drug producer and a potential entrant with a new drug, we show that CE thresholds may have adverse effects for payers and patients. A stricter CE threshold may induce the incumbent to switch pricing strategy from entry accommodation to entry deterrence, limiting patients´ access to the new drug. Otherwise, irrespective of whether entry is deterred or accommodated, a stricter CE threshold is never pro-competitive and may in fact facilitate a collusive outcome with higher prices of both drugs. Compared to a laissez-faire policy, the use of CE thresholds can only increase the surplus of a health plan if it leads to entry deterrence in which the price reduction by the incumbent necessary to deter entry outweighs the health loss to patients not getting access to the new drug. |
| Keywords: | Pharmaceuticals; Health Plans; Cost-effectiveness analysis; ICER; Therapeutic competition |
| JEL: | I11 I18 L13 L65 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:5/2022&r=com |
| By: | Christopher Conlon; Nirupama L. Rao |
| Abstract: | Products with negative externalities are often subject to regulations that limit competition. The single-product case may suggest that it is irrelevant for aggregate welfare whether output is restricted via corrective taxes or limiting competition. However, when products are differentiated curbing consumption through market power can be costly. Firms with market power may not only reduce total quantity, but distort the purchase decisions of inframarginal consumers. We examine a common regulation known as post-and-hold (PH) used by a dozen states for the sale of alcoholic beverages. Theoretically, PH eliminates competitive incentives among wholesalers selling identical products. We assemble unique data on distilled spirits from Connecticut, including matched manufacturer and wholesaler prices, to evaluate the welfare consequences of PH. For similar levels of ethanol consumption, PH leads to substantially lower consumer welfare (and government revenue) compared to excise, sales or Ramsey taxes by distorting consumption choices away from high-quality/premium brands and towards low-quality brands. Replacing PH with volumetric or ethanol-based taxes could reduce consumption by over 9% without reducing consumer surplus, and increase tax revenues by over 300%. |
| JEL: | D6 H21 H23 L13 L5 L66 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30896&r=com |
| By: | Jens-Uwe Franck |
| Abstract: | This paper focuses on institutional design aspects of the enforcement of competition law and other procompetitive regulation in fintech markets. Those interventions may prove necessary because the market entry of technology-enabled innovation may depend on accessing other (competing) market operators’ data and facilities or the enabling of data portability and interoperability of complementing financial services. Basic choices of allocating enforcement powers are identified. Five institutional design topics are discussed: bureaucratic enforcement styles and strategies; efficient use of administrative resources; motivation of staff; treatment of conflicting regulatory objectives; and legitimising elements in competition procedures. |
| Keywords: | Fintech, Competition Enforcement, Enforcing Regulation, Institutional Design, Enforcement Style, Regulatory Capture |
| JEL: | K20 K21 K22 K23 K42 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_375&r=com |
| By: | Rosa-Branca Esteves (NIPE/Center for Research in Economics and Management, University of Minho, Portugal); Ziad Ghandour (NIPE/Center for Research in Economics and Management, University of Minho, Portugal); Odd Rune Straume (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; and Department of Economics, University of Bergen, Norway) |
| Abstract: | Recent advances in healthcare information technologies allow healthcare providers to more accurately track patient characteristics and predict the future treatment costs of previously treated patients, which increases the scope for providers to quality discriminate across different patient types. We theoretically analyse the potential implications of such quality discrimination in a duopoly setting with profit-maximising hospitals, fixed prices and heterogeneous patients. Our analysis shows that the ability to quality discriminate tends to intensify competition and lead to higher quality provision, which benefits patients but makes the hospitals less profitable. Nevertheless, the effect on social welfare is a priori ambiguous, since quality discrimination also leads to an inefficient allocation of patients across hospitals. |
| Keywords: | Quality discrimination; Hospital competition; Patient heterogeneity |
| JEL: | I11 I14 L13 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:7/2022&r=com |
| By: | Luís Sá (NIPE/Center for Research in Economics and Management, University of Minho, Portugal); Odd Rune Straume (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; and Department of Economics, University of Bergen, Norway) |
| Abstract: | We study competing hospitals' incentives for quality provision in a dynamic setting where healthcare is an experience good. In our model, the utility a patient derives from choosing a particular provider depends on a subjective component specifi c to the match between the patient and the provider, which can only be learned through experience. We find that the experience-good nature of healthcare can either reinforce or dampen the demand responsiveness to quality and the hospitals' incentives for quality provision, depending on two key factors: (i) the shape of the distribution of match-specific utilities, and (ii) the cost relationship between quality provision and treatment volume. Our analysis helps identify and understand the conditions required for the market-based provision of healthcare to deliver improved quality. |
| Keywords: | Hospital competition; experience goods; forward-looking consumers; expectations; quality. |
| JEL: | I11 I18 L13 L51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:12/2022&r=com |
| By: | Montag, Felix |
| Abstract: | Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1, 300 fewer domestic jobs lost. Jobs need to be worth above $220, 000 annually for domestic employment effects to offset consumer harm. |
| JEL: | F61 L13 L40 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cbscwp:326&r=com |
| By: | Fabio M. Manenti (Department of Economics and Management M. Fanno, University of Padova); Luca Sandrini (Research Centre of Quantitative Social and Management Sciences, Budapest University of Technology and Economics) |
| Abstract: | We model a three-stage duopolistic game where firms first simultaneously choose the technological direction of their innovation, then invest in the chosen direction, and finally, compete. Investments can be in competing or non-competing innovations and their outcome is uncertain. If successful, a firm can be imitated by the rival. Patent protection prevents imitation and is granted to non-obvious innovations. We show that compared to a regime where negligible innovations are patentable, strengthening the non-obviousness requirement for patentability can increase market efficiency. Importantly, we also show that the level of the requirement may affect the direction of firms' R&D trajectories. While in a mild patent regime firms tend to invest in competing technologies, a stricter non-obviousness requirement may induce firms to operate in different technological areas, and this increases social welfare and consumer surplus. We illustrate our general theory through a stylised model of Cournot competition with process innovations. |
| Keywords: | patents, R&D, non-obviousness, direction of innovation |
| JEL: | L13 O31 O34 |
| Date: | 2023–02 |
| URL: | http://d.repec.org/n?u=RePEc:azp:qsmswp:2303&r=com |
| By: | Rosa-Branca Esteves (NIPE/Center for Research in Economics and Management, University of Minho, Portugal) |
| Abstract: | This paper assesses the welfare effects of firms´ability to use data for group and personalized pricing in markets with unit (q = 1) and multi-unit demand consumers (q > 1). The "disutility cost" of not consuming the ideal good is a function of units purchased and can increase at a decreasing rate β Ꞓ [0, 1] as consumption increases ( β is the elasticity of the disutility cost with respect to q): Group pricing (GP) and personalized pricing (PP) are compared to uniform pricing (UP). GP always boosts profits at the expense of consumers. When β = 0, PP reduces industry profits and boosts consumer welfare. The same happens when q is low and/or β is sufficiently high. In contrast, if heterogeneity in demand is sufficiently high and is sufficiently low, PP can enhance profits at the expense of consumer welfare. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:6/2022&r=com |
| By: | Janet Currie; Anran Li; Molly Schnell |
| Abstract: | We ask how competition influences the prescribing practices of physicians. Law changes granting nurse practitioners (NPs) the ability to prescribe controlled substances without physician collaboration or oversight generate exogenous variation in competition. In response, we find that general practice physicians (GPs) significantly increase their prescribing of controlled substances such as opioids and controlled anti-anxiety medications. GPs also increase their co-prescribing of opioids and benzodiazepines, a practice that goes against prescribing guidelines. These effects are more pronounced in areas with more NPs per GP at baseline and are concentrated in physician specialties that compete most directly with NPs. Our findings are consistent with a simple model of physician behavior in which competition for patients leads physicians to move toward the preferences of marginal patients. These results demonstrate that more competition will not always lead to improvements in patient care and can instead lead to excessive service provision. |
| JEL: | I11 J44 L10 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30889&r=com |
| By: | Chiara Farronato; Andrey Fradkin; Alexander MacKay |
| Abstract: | We study whether Amazon engages in self-preferencing on its marketplace by favoring its own brands (e.g., Amazon Basics) in search. To address this question, we collect new micro-level consumer search data using a custom browser extension installed by a panel of study participants. Using this methodology, we observe search positions, search behavior, and product characteristics. We find that Amazon branded products are indeed ranked higher than observably similar products in consumer search results. The prominence given to Amazon brands is 30% to 60% of the prominence granted to sponsored products. |
| JEL: | D12 D83 L13 L15 L81 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30894&r=com |
| By: | M S, Navaneeth |
| Abstract: | The paper attempts to give insights into the allocation of spectrum in Indian Telecom Industry with a particular focus since the rollout of the 4G services. While attempting to give insights into the various methods of Spectrum allocation and analyse their efficiency, the paper will also be analysing the market structure in the Indian Telecom Industry through Quantitative Indicators like the Herfindahl-Hirschman Index (HHI) and the Four-Firm Concentration ratio (CR4). The paper would also attempt to give insights and constructive criticism regarding unallocated and inefficient methods of allocating spectrums and possibilities of monopolistic market concentrations in the Telecom Sector as well as the prospects of 5G services |
| Date: | 2023–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:ykrbd&r=com |
| By: | Tanveer Hussain (School of Economics and Management, University of Minho, Portugal); Gilberto Loureiro (NIPE/Center for Research in Economics and Management, University of Minho, Portugal) |
| Abstract: | We study the corporate governance portability from bidders to targets in Mergers and Acquisitions and its impact on bidder announcement returns. We find that the bidder’s cumulative abnormal returns are higher in acquisitions where the bidder’s corporate governance quality exceeds that of the target. This result suggests a positive valuation effect for bidder shareholders resulting from the portability of good firm corporate governance from bidders to targets. We also find that this effect is stronger when bidders are domiciled in countries with better corporate governance. The results pass several robustness tests, including alternative measures of firm corporate governance and different sample periods. |
| Keywords: | corporate governance portability; global mergers and acquisitions; M&A announcement returns; international corporate governance |
| JEL: | G30 G34 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:8/2022&r=com |
| By: | Shuichiro Ikeda (Bank of Japan); Takuji Kondo (Bank of Japan); Yoshiyuki Kurachi (Bank of Japan); Taichi Matsuda (Bank of Japan); Tomoyuki Yagi (Bank of Japan) |
| Abstract: | With raw material costs increasing significantly due to high commodity prices and the yen's depreciation, firms' moves to pass on the rise in costs to selling prices have become widespread. This paper examines this recent price-setting stance of firms using microdata from the Tankan surveys. The analysis finds that in the current phase, moves to raise selling prices have been spreading even among business types and firms that were cautious about changing such prices. In addition, the results suggest the possibility that, with many firms facing significant cost increases, firms' price-setting stance has been affected by a situation in which their competitors are also forced to consider raising prices. |
| Keywords: | Cost-Push Pressures; Pass-Through; Consumer Prices; Strategic Complementarity |
| JEL: | D22 E30 E31 |
| Date: | 2023–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojrev:rev23e02&r=com |
| By: | Carina Altreiter (Institute of Sociology and Social Research, Vienna University of Economics and Business, Austria); Claudius Graebner (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Stephan Puehringer (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Ana Rogojanu (Institute for European Ethnology, University of Vienna, Austria); Georg Wolfmayr (Institute for European Ethnology, University of Vienna, Austria) |
| Abstract: | The article is a contribution to the evolving field of competition research. More precisely our paper provides a comprehensive typology of the different ways competitization is and has been studied across different disciplines and research programs. The article goes beyond a classical literature review as it provides a systematic integration of a broad debate. Based on differences regarding analytical scope, ontology and normative connotations, we delineate three distinct ideal types or 'faces' of competitization and discuss some theoretical positions and empirical examples for each ideal type of competitization. As we show in the concluding part of the article, the typology offers a useful framework for categorizing key elements of competitization and exploring their interdependencies. Additionally, the framework offered in this article shows which forms of critique towards competitization are inherent to different approaches and where we find blind spots that can be illuminated by an integrated approach towards competitization. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:146&r=com |
| By: | Gaurab Aryal; Dennis J. Campbell; Federico Ciliberto; Ekaterina A. Khmelnitskaya |
| Abstract: | In the US airline industry, independent regional carriers fly passengers on behalf of different national airlines, giving rise to $\textit{common subcontracting}$. On the one hand, we find that subcontracting is associated with lower prices, confirming the accepted notion that regional airlines can fly passengers at lower costs. On the other hand, we find that $\textit{common}$ subcontracting is associated with higher prices. These two countervailing effects suggest that the growth of regional carriers can have anticompetitive implications for the airline industry. In line with the literature, we continue to find that multimarket contact among national airlines is associated with higher prices. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2301.05999&r=com |
| By: | Fuad Hasanov; Reda Cherif; Christoph Grimpe; Wolfgang Sofka |
| Abstract: | We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries. |
| Keywords: | Innovation; patents; research and development; R&D; subsidies; multinationals; investment; technology policy; R&D subsidy; high-tech manufacturing; subsidiaries' response; low-tech manufacturing; R&D spending; Transnational corporations; Manufacturing; Services sector; Government subsidies; Investment policy; Global |
| Date: | 2022–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2022/192&r=com |