nep-ind New Economics Papers
on Industrial Organization
Issue of 2022‒03‒21
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Online video sharing and revenues during the Pandemic. Evidence from musical stream data By Mourelatos, Evangelos; Mourelatos, Haris
  2. Simulating media platform mergers By Marc Ivaldi; Jiekai Zhang
  3. A Structural Empirical Model of R&D Investment, Firm Heterogeneity, and Industry Evolution By Yanyou Chen; Daniel Xu
  4. Patent Publication and Innovation By Deepak Hegde; Kyle F. Herkenhoff; Chenqi Zhu
  5. How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased? By Leemore Dafny; Kate Ho; Edward Kong
  6. Beyond Illyria: Workers' Firm in Mixed Oligopoly By Flavio Delbono; Diego Lanzi; Carlo Reggiani

  1. By: Mourelatos, Evangelos; Mourelatos, Haris
    Abstract: This study examines how instant online video sharing affects artists' musical streams during the pandemic. On average, the use of the TikTok app significantly increases artists' streams, by approximately 5%. This increase is even higher for male, European and dj Mag 2020 new entry artists.
    Keywords: Covid-19,Streams,Online video sharing
    JEL: I1 L82 Z10
    Date: 2022
  2. By: Marc Ivaldi (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jiekai Zhang (Hanken School of Economics)
    Abstract: The empirical analysis of media platforms economics has often neglected the multi-homing behaviour of advertisers. Assuming away the cross-substitutability and/or complementarity between the advertising slots of different platforms could damage the quality and the robustness of counterfactual analysis. To evaluate the consequence of such an abstraction, we compare the simulation results of hypothetical platform mergers when the demand on the advertising side is derived from a Translog cost model which allows for multi-homing, and when it is approximated by using a simple log-linear inverse demand model that ignores the differentiation among media platforms' advertising slots. Ignoring the existence of substitutes or complements on the advertising side would result in overpredicting the losses of the viewers' surplus and in underpredicting the gains in platforms' revenues
    Keywords: Two-sided market,Platform merger,Advertising,TV market,Competition policy
    Date: 2021
  3. By: Yanyou Chen; Daniel Xu
    Abstract: This paper develops and estimates an industry equilibrium model of manufacturing plants in the Korean electric motor industry from 1991 to 1996. Plant-level decisions on R&D, physical capital investment, entry, and exit are integrated in a dynamic setting with knowledge spillovers. We use a simulated method of moments estimator and the novel approximation method of Weintraub, Benkard and Van Roy (2008) to estimate the R&D cost, magnitude of knowledge spillovers, adjustment costs of physical investment, and plant scrap value distribution. Knowledge spillovers are essential to explaining the firm-level productivity evolution and the equilibrium market configuration. A counterfactual experiment reveals that a 15% R&D subsidy maximizes industry output and is broadly consistent with a past policy initiative of the Korean government.
    JEL: L11 O33
    Date: 2022–02
  4. By: Deepak Hegde; Kyle F. Herkenhoff; Chenqi Zhu
    Abstract: How does the publication of patents affect innovation? We answer this question by exploiting a large-scale natural experiment—the passage of the American Inventor's Protection Act of 1999 (AIPA)—that accelerated the public disclosure of most U.S. patents by two years. We obtain causal estimates by comparing U.S. patents subject to the law change with “twin” European patents which were not. After AIPA's enactment, U.S. patents receive more and faster follow-on citations, indicating an increase in technology diffusion. Technological overlap increases between distant but related patents and decreases between highly similar patents, and patent applications are less likely to be abandoned post-AIPA, suggesting a reduction in duplicative R&D. Firms exposed to one standard deviation longer patent grant delays increased their R&D investment by 4% after AIPA. These findings are consistent with our theoretical framework in which AIPA provisions news shocks about related technologies to follow-on inventors and thus alters their innovation decisions.
    JEL: D23 E02 G24 L26 O34
    Date: 2022–02
  5. By: Leemore Dafny; Kate Ho; Edward Kong
    Abstract: Drug copayment coupons to reduce patient cost-sharing have become nearly ubiquitous for high-priced brand-name prescription drugs. Medicare bans such coupons on the grounds that they are kickbacks that induce utilization, but they are commonly used by commercially-insured enrollees. We estimate the causal effects of coupons for branded drugs without bioequivalent generics using variation in coupon introductions over time and comparing differential responses across enrollees in commercial and Medicare Advantage plans. Using data on net-of-rebate prices and quantities from a large Pharmacy Benefits Manager, we find that coupons increase quantity sold by 21-23% for the commercial segment relative to Medicare Advantage in the year after introduction, but do not differentially impact net-of-rebate prices, at least in the short-run. To quantify the equilibrium price effects of coupons, we employ individual-level data to estimate a discrete choice model of demand for multiple sclerosis drugs. We use our demand estimates to parameterize a model of drug price negotiations. For this category of drugs, we estimate that coupons raise negotiated prices by 8% and result in just under $1 billion in increased U.S. spending annually. Combined, the results suggest copayment coupons increase spending on couponed drugs without bioequivalent generics by up to 30 percent.
    JEL: I11 I13 L13
    Date: 2022–02
  6. By: Flavio Delbono; Diego Lanzi; Carlo Reggiani
    Abstract: We rationalize several facts emerging from the recent empirical research on cooperatives owned by workers (workers’ firms, WF) as: the concern of WFs for employment; the interplay between membership and workplace safeguard within WFs; the different reaction to shocks between WFs and profit-making firms. We do so by means of a new model of WFs short-run behavior in mixed duopoly. We consider an industry in which a WF competes with a profit maximizing company and we innovate with respect to the conventional Illyrian objective function. We then reconcile the literature on labor-concerned maximands in competitive markets and the one dealing with WFs in oligopolistic markets under the Illyrian maximand.
    JEL: L13 L21 P13
    Date: 2022–03

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