nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒01‒25
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Game complete analysis of symmetric Cournot duopoly By Carfì, David; Perrone, Emanuele
  2. Product differentiation and systematic risk: theory and empirical evidence By Bazdresch, Santiago
  3. THE EFFECTS OF COUNTERFEIT ON LUXURY BRAND BUYING BEHAVIOR, IN TERMS OF CONSUMPTION EXPERIENCE By Siham Mourad; P. Valette-Florence
  4. The Value of Failures in Pharmaceutical R&D By Jing-Yuan Chio; Laura Magazzini; Fabio Pammolli
  5. Product Modularity and the Rise of Global Value Chains: Insights from the Electronics Industry By Byron Gangnes
  6. Upgrading of Symbolic and Synthetic Knowledge Bases: Analysis of the Architecture, Engineering and Construction industry and the Automotive Industry in China By Jan van der Borg; Erwin van Tuijl

  1. By: Carfì, David; Perrone, Emanuele
    Abstract: In this paper we apply the Complete Analysis of Differentiable Games (introduced by D. Carfì in [3], [6], [8], [9], and already employed by himself and others in [4], [5], [7]) to the classic Cournot Duopoly (1838), classic oligopolistic market in which there are two enterprises producing the same commodity and selling it in the same market. In this classic model, in a competitive background, the two enterprises employ, as possible strategies, the quantities of the commodity produced. The main solutions proposed in literature for this kind of duopoly are the Nash equilibrium and the Collusive Optimum, without any subsequent critical exam about these two kinds of solutions. The absence of any critical quantitative analysis is due to the relevant lack of knowledge regarding the set of all possible outcomes of this strategic interaction. On the contrary, by considering the Cournot Duopoly as a differentiable game (a game with differentiable payoff functions) and studying it by the new topological methodologies introduced by D. Carfì, we obtain an exhaustive and complete vision of the entire payoff space of the Cournot game (this also in asymmetric cases with the help of computers) and this total view allows us to analyze critically the classic solutions and to find other ways of action to select Pareto strategies. In order to illustrate the application of this topological methodology to the considered infinite game, several compromise decisions are considered, and we show how the complete study gives a real extremely extended comprehension of the classic model.
    Keywords: duopoly; normal-form games; microeconomic Policy; complete study of differentiable games; bargaining solutions
    JEL: B21 C71 C81 C7 O12 C72
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:35930&r=ind
  2. By: Bazdresch, Santiago
    Abstract: Firms producing differentiated products have high margins and therefore low risk. As a result firms invest more into developing differentiated products when they perceive risk is high. Higher risk also implies higher product skewness towards more differentiated products and therefore higher average markups. The model predicts endogenous systematic and idiosyncratic riskiness as well as endogenous intensity of competition: firms in high risk industries reduce their riskiness by competing less than firms in low risk industries. Empirical evidence on product differentiation, R\&D expenses, B/M ratios, and market $\beta$ is consistent with the model.
    Keywords: Stock Returns; Price Differentiation; Product Market Competition; Product Development; Idiosyncratic Volatility; Research and Development; Counter-Cyclical Markups; Price of Risk; Price-Cost Margin; Investment; Innovation
    JEL: L25 L16 L11 G12 E32 E22 G32 O31
    Date: 2011–10–01
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:35504&r=ind
  3. By: Siham Mourad (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II, UPMF Grenoble II - Université Pierre Mendès France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); P. Valette-Florence (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II, UPMF Grenoble II - Université Pierre Mendès France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique, IAE Grenoble - Institut d'Administration des Entreprises - Grenoble - Université Pierre Mendès-France - Grenoble II)
    Abstract: A large number of studies on counterfeiting explore consumer behaviors in the consumption of counterfeit articles. But few of them consider luxury brand consumers and counterfeiting. Our research attempts to contribute to this field by studying strategies adopted by luxury brand consumers in the face of counterfeiting (Commuri 2009). To do so, we use the concept of an "experience of another self" in buying a product (Dampérat et al., 2002), which focuses on personal and social objects of consumption.
    Keywords: Counterfeit consumption, Luxury brand, Consumption experience
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:hal:journl:halshs-00660417&r=ind
  4. By: Jing-Yuan Chio (IMT Lucca Institute for Advanced Studies); Laura Magazzini (Department of Economics, University of Verona); Fabio Pammolli (IMT Lucca Institute for Advanced Studies and CERM Foundation; IMT Lucca Institute for Advanced Studies and Department of Managerial Economics, Strategy and Innovation, K.U. Leuven)
    Abstract: We build a cumulative innovation model in which both success and failure provide valuable information for future research. To test this learning mechanism, we use a dataset covering outcomes of world-wide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. Empirical results confirm theoretical predictions that patents associated with successfully completed projects (i.e., leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. We therefore offer evidence of the value of failures as research inputs in (pharmaceutical) innovation
    Keywords: R&D competition, patent policy, pharmaceutical industry
    JEL: D23 D83 O3
    Date: 2011–12
    URL: http://d.repec.org/n?u=RePEc:ial:wpaper:1&r=ind
  5. By: Byron Gangnes (Department of Economics, University of Hawaii at Manoa; Department of Economics, UC Davis)
    Abstract: The electronics industry has undergone a transformation from dominant vertically integrated firms to a system of lead firms that specialize in single slices of global value chains. We consider the role that modularization has played in this transformation, the insights this provides for our understanding of global supply chains, and the implications for future research.
    Keywords: economics
    JEL: C90 C73
    Date: 2011–12–01
    URL: http://d.repec.org/n?u=RePEc:hai:wpaper:201119&r=ind
  6. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari); Erwin van Tuijl (HIS and RHV, Erasmus University Rotterdam)
    Abstract: The degree and the way of upgrading differ widely per industry. This article tries to give some new insights in these differences by linking the concept of upgrading to that of the knowledge base. Moreover, we try to identify barriers to upgrading as well as the appropriate spatial scale on which upgrading takes place, again for different knowledge bases. We support our argument by analysing the process of upgrading in two industries in China: the AEC industry (in Beijing and Shanghai) and the automotive industry (in Shanghai). Within these industries we focus on upgrading on two levels: within firms and within projects. Our findings for both industries suggest that the principal ways of upgrading of the symbolic knowledge base are joint brainstorming in internal and external project teams and labour mobility. Major factors that hinder the upgrading of symbolic knowledge include the development stage of China, the Chinese educational system and tensions about duplication of western designs. Upgrading of the synthetic knowledge base takes mainly place via inter-company training programmes of foreign firms, technology transfer and labour mobility on the long run. A possible barrier for upgrading of synthetic knowledge, especially in the automotive industry, is that foreign firms tend to keep certain engineering activities in their home base because of the risk of knowledge leakage. However, this is changing quickly as many foreign carmakers and their suppliers invest in engineering centres in China due to an increasing demand for cars, to governmental regulations and to intensifying competition.
    Keywords: Urban development, upgrading, automotive industry, AEC industry, knowledge economy, China.
    JEL: L2 R00 R3 O3
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ven:wpaper:2011_25&r=ind

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