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on Industrial Organization |
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Issue of 2019‒06‒10
nine papers chosen by |
| By: | Nicolas Crouzet; Janice C. Eberly |
| Abstract: | We document that the rise of factors such as software, intellectual property, brand, and innovative business processes, collectively known as “intangible capital” can explain much of the weakness in physical capital investment since 2000. Moreover, intangibles have distinct economic features compared to physical capital. For example, they are scalable (e.g., software) though some also have legal protections (e.g., patents or copyrights). These characteristics may have enabled the rise in industry concentration over the last two decades. Indeed, we show that the rise in intangibles is driven by industry leaders and coincides with increases in their market share and hence, rising industry concentration. Moreover, intangibles are associated with at least two drivers of rising concentration: market power and productivity gains. Productivity gains derived from intangibles are strongest in the Consumer sector, while market power derived from intangibles is strongest in the Healthcare sector. These shifts have important policy implications, since intangible capital is less interest-sensitive and less collateralizable than physical capital, potentially weakening traditional transmission mechanisms. However, these shifts also create opportunities for policy innovation around new market mechanisms for intangible capital. |
| JEL: | E22 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25869&r=all |
| By: | Simon P. Anderson; Martin Peitz |
| Abstract: | We customize the aggregative game approach to oligopoly to study media platforms which may differ by popularity. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry increases consumer surplus, but decreases advertiser surplus if industry platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus tends to increase. By contrast, when platforms use two-sided pricing or consumers like advertising, advertiser and consumer interests are often aligned. |
| Keywords: | media economics, mergers, entry, advertising, aggregative games |
| JEL: | D43 L13 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_089&r=all |
| By: | Stefano Colombo; Noriaki Matsushima |
| Abstract: | We consider the spatial competition between two traditional physical (or offline) retailers and an Internet (or online) retailer where the efficiency of the latter differs from that of the former. We assume consumers are heterogeneous across two dimensions: (i) the costs of traveling to either of the offline retailers and (ii) the costs of purchasing from the online retailer. Both dimensions depend on the spatial location of consumers and are independent of each other. We show that the online retailer maximizes its profit at an intermediate level of the consumer disutility of online purchase when its efficiency is low. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1056&r=all |
| By: | Nicola Meccheri (Department of Economics and Management, University of Pisa, Italy; Rimini Centre for Economic Analysis) |
| Abstract: | This paper analyses the choice of managers' types in a vertical structure with a common input supplier. Depending on the degree of product differentiation, the choice of either an overconfident or an underconfident manager can arise whatever the downstream competition mode. Moreover, when competition is in quantities, the well-known prisoner’s dilemma result of strategic delegation does not apply when owners optimally delegate to underconfident managers. Instead, under price competition, a prisoner’s dilemma applies but only when the strategic decision is optimally delegated to overconfident managers. Moreover, the standard result that firms choose to compete in quantities is preserved when the degree of product substitutability is high, but a novel outcome with multiple asymmetric equilibria arises when the degree of product differentiation is low. |
| Keywords: | biased managers, strategic delegation, vertical structure |
| JEL: | D43 D91 L13 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:19-12&r=all |
| By: | Bernardo S. Buarque; Ronald B. Davies; Dieter F. Kogler; Ryan M. Hynes |
| Abstract: | This paper investigates the creation and integration of Artificial Intelligence (AI) patents in Europe. We create a panel of AI patents over time, mapping them into regions at the NUTS2 level. We then proceed by examining how AI is integrated into the knowledge space of each region. In particular, we find that those regions where AI is most embedded into the innovation landscape are also those where the number of AI patents is largest. This suggests that to increase AI innovation it may be necessary to integrate it with industrial development, a feature central to many recent AI-promoting policies. |
| Keywords: | Artificial Intelligence; Geography of Innovation; Knowledge Space; Technological Change; Regional Studies |
| JEL: | O33 O31 R11 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201911&r=all |
| By: | Langinier, Corinne; Ray Chaudhuri, A. (Tilburg University, Center For Economic Research) |
| Abstract: | We develop a theoretical framework to investigate the impact of patent policies and emission taxes on green innovation that reduces the emission output ratio, and on the emission level. In the absence of green consumers, the introduction of patents results in a paradox whereby increasing emission tax beyond a certain threshold leads to a discrete increase in the emission level, which may be avoided by reducing the patenting cost. In the presence of green consumers, this paradox is restricted to an intermediate range of tax rates, and at sufficiently high tax rates, reducing the patenting cost may increase the emission level. Also, higher emission taxes increase green investment only if the fraction of green consumers is sufficiently small, and the magnitude of this effect decreases as this fraction increases.Moreover, a stricter patentability requirement is only effective at reducing emissions if the fraction of green consumers is sufficiently small. |
| Keywords: | patent; clean technologies; environmentally friendly consumers |
| JEL: | O34 L13 Q50 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:03e766c3-0046-4ddf-b9aa-44fb81ed9458&r=all |
| By: | Cabral, Luís M. B.; Schober, Dominik; Woll, Oliver |
| Abstract: | We examine the relation between consumer search and equilibrium prices when collusion is endogenously determined. We develop a theoretical model and show that average price is a U-shaped function of the measure of searchers: prices are highest when there are no searchers (local monopoly power) or when there are many searchers (and sellers opt to collude). We test this prediction with diesel retail prices in Dortmund, Germany. We estimate a U-shaped relation with statistical precision and a €.025/liter price variation due to the variation in the measure of searchers. |
| Keywords: | Collusion,Cartelization,Fuel Retailing,Search,Competitive Intensity |
| JEL: | L1 L4 L5 L9 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19018&r=all |
| By: | Waterson, Michael (University of Warwick); Xie, Jian (University of Warwick) |
| Abstract: | We investigate the London bus market, a large market with regular procurement of bus services, for possible collusion using a wide variety of techniques, making use of the data at our disposal. There is little evidence of collusion in bidding for contracts apparent from our data, despite some features of the market that might lead to collusive behaviour. |
| Keywords: | Cartel behaviour ; Procurement ; Detecting Cartels ; Bus market |
| JEL: | D44 L41 L92 D22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1196&r=all |
| By: | Stephan Heblich; Marlon Seror; Hao Xu; Stephan Yanos Zylberberg |
| Abstract: | This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 "Million-Rouble plants" in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the "156" program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries. |
| Keywords: | USSR, China, million-rouble plants. |
| Date: | 2019–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:19/712&r=all |