nep-ind New Economics Papers
on Industrial Organization
Issue of 2018‒04‒09
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Note on the Degree of Scale Economies when Firms Make Technology Choice By Koji SHINTAKU
  2. Heterogeneity in Conformism, Firm Selection, and Home Bias By Sergey Kichko; Pierre M. Picard

  1. By: Koji SHINTAKU
    Abstract: We construct a simple model to demonstrate how the rm-level degree of scale economies (D-SE) is determined when rms make technology choice. In particular, we illustrate the importance of factors external to rms that affect the efficiency of rms' technology choice, when determining D-SE. We interpret the external factors as public knowledge stock. A change in public knowledge stock affects D-SE both directly through knowledge spillover reinforcing technology choice and indirectly through a change in the rm's output. When output is endogenized in a monopolistic competition model with a variable mark-up rate, an increase in public knowledge stock raises D-SE through technology upgrading if the mark- up rate is increasing in output. This can be testable because public knowledge stock has some measurements. There is an policy implication that various policies with knowledge stock affect D-SE as policies with xed costs.
    Keywords: disasters; Degree of scale economies; Technology choice; Public knowledge stock;Knowledge spillover; Variable mark-up rate.
    JEL: D21 D24 F10 F12 L11 L16
  2. By: Sergey Kichko (National Research University Higher School of Economics); Pierre M. Picard (Universite du Luxembourg)
    Abstract: This paper discusses the impact of conformism on product quality, firm selection, and trade patterns. It shows that when consumers have a higher degree of conformism and/or their distribution of conformism becomes more concentrated, the equilibrium average demand falls while product quality rises in a closed economy. In an international trade context, this strengthens the home consumption bias when consumers conform to the behavior of local people. The home bias is mitigated under globalization where individuals tend to conformto peopleworldwide. The paper also discusses the conditions under which conformism and conspicuousness are reconciled.
    Keywords: heterogeneity in conformism; product quality; firmheterogeneity; home bias.
    JEL: L11 F12
    Date: 2018

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