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on Industrial Organization |
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Issue of 2022‒10‒31
seven papers chosen by |
| By: | Øyvind A. Nilsen; Arvid Raknerud (Statistics Norway) |
| Abstract: | This paper investigates firm dynamics in the period before, during, and after an event consisting of a first published patent application. The analysis is based on patent data from the Norwegian Industrial Property Office merged with data from several business registers covering a period of almost 20 years. We apply an event study design and use matching to control for confounding factors. The first patent application by a young firm is associated with significant growth in employment, output, assets and public research funding. Moreover, our results indicate that economic activity starts to increase at least three years ahead of the first patent application. However, we find no evidence of additional firm growth after patent approval for successful applicants. Our findings indicate that the existence of a properly functioning patenting system supports innovation activities, especially early in the life cycle of firms. |
| Keywords: | Patenting; Firm performance; Panel data; Event study design |
| JEL: | C33 D22 O34 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:986&r= |
| By: | Lucia Foster; John Haltiwanger; Cody Tuttle |
| Abstract: | Recent evidence suggests the U.S. business environment is changing, with rising market concentration and markups. The most prominent and extensive evidence backs out firm-level markups from the first-order conditions for variable factors. The markup is identified as the ratio of the variable factor’s output elasticity to its cost share of revenue. Our analysis starts from this indirect approach, but we exploit a long panel of manufacturing establishments to permit output elasticities to vary to a much greater extent - relative to the existing literature - across establishments within the same industry over time. With our more detailed estimates of output elasticities, the measured increase in markups is substantially dampened, if not eliminated, for U.S. manufacturing. As supporting evidence, we relate differences in the markups’ patterns to observable changes in technology (e.g., computer investment per worker, capital intensity, diversification to non-manufacturing), and we find patterns in support of changing technology as the driver of those differences. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:22-38&r= |
| By: | Silva, Thiago; Souza, Sérgio; Guerra, Solange; Tabak, Benjamin |
| Abstract: | The literature measures a bank's market power using aggregated data at the bank level. However, market power may be exercised in a decentralized way by each bank branch and for specific banking products. This article proposes a novel methodology for estimating a bank's market power at the branch level in each locality and for each banking product. We find significant heterogeneity in banks' market power by locality and product, even within the same bank. Our results suggest that aggregate measures of bank market power may be misleading and distorted. Accurate quantification of market power requires fine-grained measures, which are essential for enhancing financial regulation and competition. |
| Keywords: | market power, Lerner index, competition, credit market, COVID-19 |
| JEL: | C51 G20 G21 L11 |
| Date: | 2022–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114766&r= |
| By: | Matthijs R. Wildenbeest (University of Arizona and CEPR, McClelland Hall, 1130 E Helen St, Tucson, AZ 85721) |
| Abstract: | This paper develops a structural model of online news consumption that explicitly takes into account that consumers may not consider all online news sources. Using a unique data set that contains browsing behavior of a large number of individuals as well as survey data that contains their political outlook, we estimate to what extent online news consumption choices are driven by the ideology and quality of online news sources when consideration is limited. We find that estimation of our consideration set model leads to mostly larger estimates of the quality of news sources and better fits joint visiting patterns observed in the data than a full consideration model. These findings have implications for counterfactuals in which the availability of news sources changes, and may lead to different predictions with respect to how these changes affect online segregation. |
| Keywords: | online news; consideration set models; online segregation |
| JEL: | C13 D83 L15 L82 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2210&r= |
| By: | Noriaki Matsushima; Shohei Yoshida |
| Abstract: | We consider a downstream oligopoly model with one dominant and several fringe retailers who purchase a manufacturing product from a monopoly supplier. We examine how contract type influences the relationship between the dominant retailer's bargaining power and the equilibrium retail price. If the contracts between the supplier and fringe retailers are contingent on the bargaining outcome between the supplier and the dominant retailer, the bargaining power does not affect the retail price. In contrast, if contracts with fringe retailers are not contingent, the relationship between bargaining power and retail price can be either positive or negative. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1191&r= |
| By: | Marc Bourreau (Telecom Paris, Department of Economics and Social Sciences, 19 place Marguerite Perey, 91120 Palaiseau, France); Yutec Sun (CREST-ENSAI, 51 Rue Blaise Pascal, 35170 Bruz, France) |
| Abstract: | We measure the impact of a new entry on quality supply and welfare in the French mobile service market, where the service providers compete on investing in network resources to meet fast-growing demand for mobile consumption. As network's quality is endogenous to strategic investments, it is unclear whether the entry led the market closer to the socially optimal level of quality supply and welfare. We develop a tractable approach to empirically analyze the dynamic oligopoly game of investment in the network resources in the market where consumers face substantial costs of switching among differentiated services. The counterfactual analysis finds that the quality may be oversupplied in oligopoly competition from the social welfare perspective, while the merger is predicted to yield undersupplied quality. |
| Keywords: | entry, quality, competition, investment, innovation |
| JEL: | L13 L43 L96 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2204&r= |
| By: | Jean-François Houde; Terence R. Johnson; Molly Lipscomb; Laura A. Schechter |
| Abstract: | We study the extent to which collusion can explain the under-provision of clean sanitation technologies in developing countries. Using desludging services in Dakar as a case-study, we document that prices are 66% higher in areas where prices are likely coordinated by a large trade association, compared to nearby neighborhoods supplied by unaffiliated companies. We then develop an experimental just-in-time auction platform with random variation in several design features aimed at learning about the extent of competition. Consistent with the collusion hypothesis, we find that most bidders systematically avoid competition by placing round bids and refusing to undercut rivals. |
| JEL: | L12 L41 O55 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30514&r= |