2013-03-30 papers

on Industrial Organization

Issue of 2013‒03‒30
two papers chosen by

Regulating a multiproduct and multitype monopolist By Szalay, Dezsö
The Location of Industrial Innovation: Does Manufacturing Matter? By Isabel Tecu

Regulating a multiproduct and multitype monopolist

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=ind

The Location of Industrial Innovation: Does Manufacturing Matter?

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=ind

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