nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒11‒26
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Learning, Prices, and Firm Dynamics By Paulo Bastos; Daniel A. Dias; Olga A. Timoshenko
  2. Verifying High Quality: Entry for Sale By Norbäck, Pehr-Johan; Persson, Lars; Svensson, Roger
  3. Mode of Entry into Hybrid Entrepreneurship: New Venture Start-Up versus Business Takeover By Xi, Guoqian; Block, Jörn; Lasch, Frank; Robert, Frank; Thurik, Roy

  1. By: Paulo Bastos (Development Research Group, World Bank); Daniel A. Dias (Board of Governors of the Federal Reserve System, International Finance Division, Washington DC); Olga A. Timoshenko (The George Washington University, Department of Economics and The Elliott School of International A airs)
    Abstract: We document new facts about the evolution of rm performance and prices in international markets, and propose a theory of rm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, we nd that: (1)firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) older exporters tend to use more expensive inputs; (3) the volatility of output and input prices tends to decline with export experience; and (4) input prices and quantities tend to increase with revenue growth within rms. We develop a model of endogenous input and output quality choices in a learning environment that is able to account for these patterns. Counterfactual simulations reveal that minimum quality standards on traded goods reduce welfare by lowering entry in export markets and reallocating resources from old and large towards young and small rms.
    Keywords: Learning about demand, prices, product quality, firm dynamics, quality standards
    JEL: F12 F14 L11 O14
    Date: 2017–09
    URL: http://d.repec.org/n?u=RePEc:mde:wpaper:0086&r=ind
  2. By: Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)); Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that lowquality inventions are sold directly or used for own entry. Inventors who sell post-entry use entry to credibly reveal information on quality. Incumbents are then willing to pay high prices for high-quality inventions to preempt rivals from obtaining them. Using Swedish data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition, post entry.
    Keywords: Acquisitions; Innovation; Start-ups; Ownership; Patents; Verification; Quality
    JEL: G24 L10 L20 M13 O30
    Date: 2017–10–30
    URL: http://d.repec.org/n?u=RePEc:hhs:iuiwop:1186&r=ind
  3. By: Xi, Guoqian (University of Trier); Block, Jörn (University of Trier); Lasch, Frank (Montpellier Business School); Robert, Frank (Montpellier Business School); Thurik, Roy (Erasmus University Rotterdam)
    Abstract: Many entrepreneurs start their ventures while retaining jobs in wage employment; this phenomenon is called hybrid entrepreneurship. Little is known about the entry modes (new venture start-up vs. business takeover) of hybrid entrepreneurs. Our study aims to close this gap by investigating the path to hybrid entrepreneurship. Using a large sample of French hybrid entrepreneurs, we show that educational attainment and management experience are associated with new venture start-up, whereas being female, having worker experience, and having received social benefits are linked to business takeover. With these results, our study contributes to research on hybrid entrepreneurship and entrepreneurship entry modes. Moreover, it informs policy makers about the nature of hybrid entrepreneurship and contributes to the design of effective policies to promote business takeover, which is of high interest, given the growing number of businesses seeking outside successors.
    Keywords: hybrid entrepreneurship, entrepreneurship entry mode, business takeover, new venture
    JEL: L26
    Date: 2017–10
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp11104&r=ind

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