nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒12‒28
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Vertical Integration and Value Relevance: Empirical Evidence from Oil and Gas Producers By Misund, Bård
  2. Path dependence and induced innovation By Karsten Wasiluk
  3. Global Collaborative Patents By Sari Pekkala Kerr; William R. Kerr
  4. Patent Rights and Innovation by Small and Large Firms By Alberto Galasso; Mark Schankerman

  1. By: Misund, Bård (UiS)
    Abstract: Oil and gas exploration companies (E&Ps) exhibit large variations in earnings due to volatile oil and gas prices. Furthermore, their primary asset, oil and gas reserves, is accumulated through highly risky exploration activities. In contrast, integrated oil and gas companies display lower variability in their earnings due a more diversified asset base. The literature suggests that companies with higher earnings volatility and higher levels of intangibles among their assets should have lower value relevance of accounting information than companies with higher levels of tangible assets on their balance sheets. For that reason E&P companies should have lower value relevance than integrated companies. Contrary to expectations, we do not find lower value relevance for E&Ps earnings than integrated oil and gas companies. In fact, the results suggest that the presence of supplementary fair value estimates for oil and gas reserves mitigate the potential problem associated with the presence of intangible assets experienced in other industries.
    Keywords: Company Valuation; Value-relevance; Oil and Gas Industry; Vertical Integration
    JEL: G12 M21 M40 Q49
    Date: 2015–12–18
  2. By: Karsten Wasiluk (Department of Economics, University of Konstanz, Germany)
    Abstract: This paper presents an endogenous growth model that captures the origins of path dependence and technological lock-in and introduces a mechanism of induced innovation, which can trigger new research. Imperfect spillovers of secondary development can make the development of new technologies unattractive until research ceases in the long run. Changes in the relative supply of primary factors act as a stimulus for research as new technologies are better suited for the new environment. A simulation using changes of crude oil prices in the US shows the quantitative significance of the model's implications. The model is able to explain long waves of economic development where growth cycles are triggered by changes in the relative factor supply. It also provides a new rationale for governmental regulations such as Pigouvian taxes and pollution permits as they can stimulate innovation and provide the base for the development of "green" technologies.
    Keywords: Path Dependence, Induced Innovation, Directed Technological Change, Growth Cycles
    JEL: O30 O31 O33 O44
    Date: 2015–04–21
  3. By: Sari Pekkala Kerr; William R. Kerr
    Abstract: We study the prevalence and traits of global collaborative patents for U.S. public companies, where the inventor team is located both within and outside of the United States. Collaborative patents are frequently observed when a corporation is entering into a new foreign region for innovative work, especially in settings where intellectual property protection is weak. We also connect collaborative patents to the ethnic composition of the firm's U.S. inventors and cross-border mobility of inventors within the firm. The inventor team composition has important consequences for how the new knowledge is exploited within and outside of the firm.
    JEL: F02 F22 F23 J15 O19 O31 O32 O33 O34
    Date: 2015–11
  4. By: Alberto Galasso; Mark Schankerman
    Abstract: This paper studies the causal impact of patents on subsequent innovation by the patent holder. The analysis is based on court invalidation of patents by the U.S. Court of Appeals for the Federal Circuit, and exploits the random allocation of judges to control for the endogeneity of the judicial decision. Patent invalidation leads to a 50 percent decrease in patenting by the patent holder, on average, but the impact depends critically on characteristics of the patentee and the competitive environment. The effect is entirely driven by small innovative firms in technology fields where they face many large incumbents. Invalidation of patents held by large firms does not change the intensity of their innovation but shifts the technological direction of their subsequent patenting.
    JEL: K41 L24 O31 O32 O34
    Date: 2015–12

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