nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒10‒25
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Open Innovation in a dynamic cournot duopoly By Hasnas, Irina; Lambertini, Luca; Palestini, Arsen
  2. Apple’s Changing Business Model: What Should the World’s Richest Company Do with All Those Profits? By William Lazonick; Mariana Mazzucato; Öner Tulum
  3. They played the merger game: A retrospective analysis in the UK videogames market By Aguzzoni, Luca; Argentesi, Elena; Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Tognoni, Massimo; Vitale, Cristiana

  1. By: Hasnas, Irina; Lambertini, Luca; Palestini, Arsen
    Abstract: In recent years Open Innovation (OI) processes have been receiving growing attention from the empirical and theoretical economic literature, where a debate is taking place on the aspects of complementarity or substitutability between internal R&D and OI spillover. By means of a differential game approach, we analyze the case of substitutability in an OI setup in a Cournot duopoly where knowledge spillovers are endogenously determined via the R&D process. The game produces multiple steady states, allowing for an asymmetric solution where a firm may trade off the R&D investment against information absorption from the rival. The technical analysis and the numerical simulations point out that the firm which commits to a higher level of OI absorption produces a smaller output and enjoys higher profits than its rival. --
    Keywords: R&D,spillovers,dynamic games
    JEL: C73 L13 O31
    Date: 2013
  2. By: William Lazonick (University of Massachusetts, Lowell, USA); Mariana Mazzucato (SPRU, University of Sussex, UK); Öner Tulum (University of Massachusetts, Lowell, USA)
    Date: 2013–10–16
  3. By: Aguzzoni, Luca; Argentesi, Elena; Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Tognoni, Massimo; Vitale, Cristiana
    Abstract: We study the effect of a merger in a dynamic high-technology industry - the videogame market - which is characterized by frequent introduction of new products. To assess the impact of the merger between two large specialist retailers in the UK, we perform a difference-in-differences analysis comparing the price evolution of the merging parties to that of their 7 major competitors on an original sample of 196 videogames belonging to six different consoles. The results of our econometric analyses suggest that there has been a reduction in the general level of prices of both new and pre-owned games after the merger. This decline has been more marked for the merging parties, which suggests that the merger between Game and Gamestation did not lead to a substantial lessening of competition; rather it is consistent with the existence of efficiency gains. --
    Keywords: R&D,Ex-post Evaluation,Videogames market,Retail sector
    JEL: K21 L24 L44 D22 O32
    Date: 2013

This nep-ind issue is ©2013 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.