nep-ind New Economics Papers
on Industrial Organization
Issue of 2008‒02‒02
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Spillovers of Innovation Activities and Their Profitability By Czarnitzki, Dirk; Kraft, Kornelius
  2. Location and R&D alliances in the European ICT industry By Rajneesh Narula; Grazia D. Santangelo
  3. Measuring the Welfare Effect of Entry in Differentiated Product Markets: The Case of Medicare HMOs By Shiko Maruyama

  1. By: Czarnitzki, Dirk; Kraft, Kornelius
    Abstract: Knowledge spillovers to competitors are regarded as an important aspect of the innovation process. While a company possibly benefits from incoming information on successful R&D conducted by other companies, a generally high probability of leakage of knowledge in an industry will negatively affect profitability. This paper presents the results of an empirical study on the effects of outgoing and incoming spillovers on firms’ profitability. It turns out that the expected asymmetry is actually at work. In contrast to spillovers from competitors, spillovers from suppliers, customers and research institutions exert no effect.
    Keywords: Innovation, Spillover, Profitability
    JEL: L12 O31 O32
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:6893&r=ind
  2. By: Rajneesh Narula (Department of Economics, University of Reading Business School); Grazia D. Santangelo (Facoltà di Scienze Politiche, Università degli Studi di Catania)
    Abstract: This paper shows empirically that in an intra-industry oligopolistic scenario the location of a firm’s innovative activities plays an important role in determining its partner selection in R&D alliances. Such a role is mainly attributed to a strategic use of R&D alliances as a means to limit knowledge flows and protect competences, rather than to promote knowledge flows. By drawing on a novel dataset matching alliances and patent data for the European ICT industry, the econometric analysis shows that partners’ prior co-location (at both national and sub-national regional level), previous ties and technological overlap matter in the choice of partner, while common nationality has a negative impact on alliance formation.
    Keywords: Alliances, R&D location, strategy, co-location, knowledge flows
    JEL: D23 F23 O18 O32 R3
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:rdg:cibswp:cibs-wp2007-01&r=ind
  3. By: Shiko Maruyama (School of Economics, The University of New South Wales)
    Abstract: Should governments subsidize entry to promote competition? In general, theory models cannot determine whether entry under the free-entry condition is socially excessive, optimal, or insufficient. In this paper I propose an empirical framework to evaluate welfare consequences of policy intervention through entry in differentiated product markets, with a case study of the US Medicare HMO market. In endogenizing firms' entry-exit decision, a technical breakthrough is to explicitly incorporate firm heterogeneity by employing a sequential move game. This enables us to exploit detailed firm level data and makes policy simulations relevant. I find no evidence of socially excessive entry. The government may achieve higher social welfare by expanding the program.
    Date: 2008–01
    URL: http://d.repec.org/n?u=RePEc:swe:wpaper:2008-01&r=ind

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