nep-ind New Economics Papers
on Industrial Organization
Issue of 2016‒02‒23
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Bright Side of Patents By Farre-Mensa, Joan; Hegde, Deepak; Ljungqvist, Alexander P.
  2. Structural remedies as a signalling device By Dertwinkel-Kalt, Markus; Wey, Christian
  3. Merger policy in a quantitative model of international trade By Holger Breinlich; Volker Nocke; Nicolas Schutz
  4. Settlements and appeals in the European Commission's cartel cases: An empirical assessment By Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
  5. State intervention in wine markets and collective action in France and Spain during the early twentieth century By Jordi Planas

  1. By: Farre-Mensa, Joan; Hegde, Deepak; Ljungqvist, Alexander P.
    Abstract: Motivated by concerns that the patent system is hindering innovation, particularly for small inventors, this study investigates the bright side of patents. We examine whether patents help startups grow and succeed using detailed micro data on all patent applications filed by startups at the U.S. Patent and Trademark Office (USPTO) since 2001 and approved or rejected before 2014. We leverage the fact that patent applications are assigned quasi-randomly to USPTO examiners and instrument for the probability that an application is approved with individual examiners’ historical approval rates. We find that patent approvals help startups create jobs, grow their sales, innovate, and reward their investors. Exogenous delays in the patent examination process significantly reduce firm growth, job creation, and innovation, even when a firm’s patent application is eventually approved. Our results suggest that patents act as a catalyst that sets startups on a growth path by facilitating their access to capital. Proposals for patent reform should consider these benefits of patents alongside their potential costs.
    Keywords: entrepreneurship; innovation; patents; R&D; venture capital
    JEL: D23 G24 L26 O34
    Date: 2016–02
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:11091&r=ind
  2. By: Dertwinkel-Kalt, Markus; Wey, Christian
    Abstract: We analyze the effects of structural remedies on merger activity in a Cournot oligopoly when the Antitrust Agency (AA) cannot observe a proposed merger's efficiency type. Provided the AA follows a consumer surplus standard, an efficient merger type is doomed to over-fix with its divestiture proposal in a pooling equilibrium, which is also possible under separation.
    Keywords: Remedies,Divestiture,Merger Control,Signalling
    JEL: L13 L41 K21
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:zbw:dicedp:209&r=ind
  3. By: Holger Breinlich; Volker Nocke; Nicolas Schutz
    Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. Calibrating the model to match industry-level data in the U.S. and Canada, we show that at present levels of trade costs merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.
    Keywords: mergers and acquisitions; merger policy; trade policy; oligopoly; international trade
    JEL: F12 F13 L13 L44
    Date: 2015–10
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:64983&r=ind
  4. By: Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: The introduction of the European Union (EU) Settlement Procedure in 2008 aimed at promoting the procedural efficiency of cartel investigations by the European Commission (EC). We use a data set consisting of 579 firms groups convicted by the EC for cartelization from 2000 to 2015 to investigate the impact of the settlement procedure on the probability to file an appeal. Based on the estimation of a model of the firm's decision to appeal in the presettlement era, we subsequently run out-of-sample predictions to estimate the number of hypothetical appeals cases in the settlement era absent the settlement procedure. Our findings of a settlement-induced reduction in the number of appeals of up to 55 percent allow the conclusion that the introduction of the settlement procedure generated substantial additional benefits to society beyond its undisputed key contribution of a faster and more efficient handling of cartel investigations by the EC.
    Keywords: antitrust policy,cartels,settlements,appeals,ex-post evaluation,European Union
    JEL: K21 L41
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:16010&r=ind
  5. By: Jordi Planas (Universitat de Barcelona, Barcelona, Spain)
    Abstract: In the early twentieth century winegrowersin Europe faced a crisis of overproduction, with steeply falling prices and sharp increases in wages and production costs. Since the markets showed no signs of correcting themselves, the winegrowers called for state intervention. In the major wine producing countries such as France and Spain, large winegrowers’ associations were created which lobbied their governments to regulate domestic wine markets through tariffs, quality controls, the creation of regional appellations and bodies investigating fraud in winemaking, and also promoted other measures to increase the consumption of unadulterated wine. However, while winegrowers in France were highly successful in obtaining government support to protect their market interests, in Spain the legislation introduced was much more eclectic; it aimed to satisfy on the one hand the winegrowers and on the other the alcohol producers, wine merchants and exporters, even though the interests of these groups often clashed head on. This paper aims to explain the differences in state intervention and wine market regulation in these two major producer countries in the early twentieth century, by analysing the particular features of their markets and productive systems in the aftermath of the phylloxera plague, as well as the winegrowers’ collective action and the political framework in each country.
    Keywords: Palabras clave: state intervention, market regulation, winegrowers, collective action, France, Spain.
    JEL: L15 N53 N54 Q18
    Date: 2015–01
    URL: http://d.repec.org/n?u=RePEc:ahe:dtaehe:1503&r=ind

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