nep-ind New Economics Papers
on Industrial Organization
Issue of 2021‒02‒15
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Stricter patent regime, scientist mobility and innovation By Madhuparna Ganguly
  2. Capping Commissions in the Presence of Price Competition By Schuler, Sebastian
  3. Intellectual property and the organization of the global value chain By Stefano Bolatto; Alireza Naghavi; Gianmarco Ottaviano; Katja Zajc Kejzar
  4. Value capture dynamics – opportunity-driven changes By Najda-Janoszka, Marta
  5. Rules, institutions, or both? Estimating the drivers of telecommunication investment in Latin America By Jung, Juan; Melguizo, Angel

  1. By: Madhuparna Ganguly (Indira Gandhi Institute of Development Research)
    Abstract: We model a patent regime in which an innovating firm can partially recover its damage due to scientist movement from the infringing rival. The strength of the patent system, which is a function of litigation success probability and recovery proportion, stipulates expected indemnification. We show that stronger patents fail to reduce the likelihood of infringement and further, decrease the innovation's expected profitability. Higher potential reparation also reduces the scientist's expected return on R&D knowledge, entailing greater R&D investment. The expected effects manifest when the market for the new product is moderately competitive. Our results suggest important considerations for patent reforms.
    Keywords: Competition intensity, Damage rules, Patent strength, Scientist mobility
    JEL: J60 K40 L11 L13 O34
    Date: 2020–11
  2. By: Schuler, Sebastian
    Abstract: This paper analyzes the welfare impact of a cap on commissions paid by product providers to intermediaries who advise consumers. In contrast to the extant literature, with a downward sloping demand capped commissions have a direct impact on product providers' margins and consumers' prices. I show that a general ban is not welfare optimal as higher commissions do not necessarily lead to higher consumer prices. Starting from a general ban, allowing (marginally) higher commissions leads to lower prices as positive commissions make intermediaries wary to recommend more expensive products to consumers, thus making demand more elastic with respect to price.
    Keywords: Advice; Cheap Talk;, Commissions; Regulation
    JEL: D21 D82 D83 L15
    Date: 2020–10–20
  3. By: Stefano Bolatto; Alireza Naghavi; Gianmarco Ottaviano; Katja Zajc Kejzar
    Abstract: This paper introduces the concept of intangible assets in a property rights model of sequential supply chains. Firms transmit knowledge to their suppliers to facilitate input customization. Yet, to avoid knowledge dissipation, they must protect the transmitted intangibles, the cost of which depends on the knowledge intensity of inputs and the quality of institutions protecting intellectual property rights (IPR) in supplier locations. When input knowledge intensity increases (decreases) downstream and suppliers' investments are complements, the probability of integrating a randomly selected input is decreasing (increasing) in IPR quality and increasing (decreasing) in the relative knowledge intensity of downstream inputs. Opposite but weaker predictions hold when suppliers' investments are substitutes. Comprehensive trade and FDI data on Slovenian firms' value chains provide evidence in support of our model's predictions. They also suggest that, in line with our model, better institutions may have very different effects on firm organization depending on whether they improve the protection of tangible or intangible assets.
    Keywords: sequential production, intellectual property, intangible assets, appropriability, stage complementarity, upstreamness, firm organization, outsourcing, vertical integration
    JEL: F12 F14 F21 F23 D23 L22 L23 L24 O34
    Date: 2020–01
  4. By: Najda-Janoszka, Marta
    Abstract: The study addresses the gap in the research concerning the dynamics of the value capture process. The aim is to enhance the understanding of the dynamics of value appropriation by identifying those decision-making practices and strategic behaviours that are entrepreneurial in nature. The conceptual discussion is supported by the empirical research governed by a multiple case design. The longitudinal study generated valuable insights into the processual character of value appropriation, as well as into its variable, not always linear, occurrence with value creation. The collected data provide rich evidence of opportunity-driven changes in the value capture action lines.
    Keywords: entrepreneurial orientation, value capture, value appropriation, opportunity
    JEL: L14 L24 O33
    Date: 2020
  5. By: Jung, Juan; Melguizo, Angel
    Abstract: This paper analyzes the link between regulation, institutions, and telecommunications investment in Latin America. The investment levels of the region lag behind those of advanced economies and are impeding substantial progress on digital transformation. Using a database built for this analysis, which covers nearly 90% of Latin American countries for 2007-2017, we confirm the relevance of regulatory and institutional frameworks to explain investment trends in the sector. We also show that a “good” institutional quality contributes significantly to counteract partially a “bad” regulatory environment, and vice versa. Moreover, their impact is significantly stronger when good regulation and institutions interact, suggesting that joint reforms to improve institutions and the regulatory environment would pay off. In particular, improving cybersecurity and piracy control regulation, and fighting corruption and undue influence stand out as the priorities to increase telecommunication investment in Latin America.
    Keywords: Telecommunications, Regulation, Institutions
    JEL: L51 L96 L98
    Date: 2020–09–20

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