nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒09‒26
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Limits of Price Discrimination By Dirk Bergemann; Benjamin A. Brooks; Stephen Morris
  2. (De)Regulation and Market Thickness By Jean Guillaume Forand; Vikram Maheshri
  3. Patents and Cumulative Innovation:Causal Evidence from the Courts By Galasso, Alberto; Schankerman, Mark
  4. The Location of the UK Cotton Textiles Industry in 1838: a Quantitative Analysis By Nicholas Crafts; Nikolaus Wolf

  1. By: Dirk Bergemann; Benjamin A. Brooks; Stephen Morris
    Date: 2013–09–19
    URL: http://d.repec.org/n?u=RePEc:cla:levarc:786969000000000776&r=ind
  2. By: Jean Guillaume Forand (University of Waterloo); Vikram Maheshri (University of Houston)
    Abstract: Regulation is a set of constraints imposed on transactions between buyers and sellers. We introduce a dynamic frictional matching model with horizontal differentiation and nontransferable utility in which a regulator determines permissible transactions. We show the existence and uniqueness of a market equilibrium for any level of regulation and characterize the regulator’s optimal choice of regulatory environment. We argue that in ‘thin’, markets, regulation can correct market failure arising from mismatch between buyers and sellers. However, in ‘thick’ markets, deregulation is optimal, as a regulator can rely on market participants’ equilibrium behavior instead of explicit constraints on economic activities.
    Keywords: Regulation, Search, Thickness, Horizontal Differentiation
    JEL: D L
    Date: 2013–09–06
    URL: http://d.repec.org/n?u=RePEc:hou:wpaper:2013-252-38&r=ind
  3. By: Galasso, Alberto; Schankerman, Mark
    Abstract: Cumulative innovation is central to economic growth. Do patent rights facilitate or impede such follow-on innovation? This paper studies the causal effect of removing patent protection through court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeal for the Federal Circuit to control for the endogeneity of patent invalidation. We find that patent invalidation leads to a 50 percent increase in subsequent citations to the focal patent, on average, but the impact is highly heterogeneous. Patent rights appear to block follow-on innovation only in the technology fields of computers, electronics and medical instruments. The effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.
    Date: 2013–08
    URL: http://d.repec.org/n?u=RePEc:hit:iirwps:13-16&r=ind
  4. By: Nicholas Crafts (University of Warwick); Nikolaus Wolf (Humboldt University Berlin)
    Abstract: We examine the geography of cotton textiles in Britain in 1838 to test claims about why the industry came to be so heavily concentrated in Lancashire. Our analysis considers both first and second nature aspects of geography including the availability of water power, humidity, coal prices, market access and sunk costs. We show that some of these characteristics have substantial explanatory power. Moreover, we exploit the change from water to steam power to show that the persistent effect of first nature characteristics on industry location can be explained by a combination of sunk costs and agglomeration effects.
    Keywords: agglomeration; cotton textiles; geography; industry location
    JEL: N63 N93 R12
    Date: 2013–09
    URL: http://d.repec.org/n?u=RePEc:hes:wpaper:0045&r=ind

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