|
on Industrial Organization |
|
Issue of 2024‒03‒11
six papers chosen by |
| By: | Joshua S. Gans |
| Abstract: | New generative artificial intelligence (AI) models, including large language models and image generators, have created new challenges for copyright policy as such models may be trained on data that includes copy-protected content. This paper examines this issue from an economics perspective and analyses how different copyright regimes for generative AI will impact the quality of content generated as well as the quality of AI training. A key factor is whether generative AI models are small (with content providers capable of negotiations with AI providers) or large (where negotiations are prohibitive). For small AI models, it is found that giving original content providers copyright protection leads to superior social welfare outcomes compared to having no copyright protection. For large AI models, this comparison is ambiguous and depends on the level of potential harm to original content providers and the importance of content for AI training quality. However, it is demonstrated that an ex-post `fair use' type mechanism can lead to higher expected social welfare than traditional copyright regimes. |
| JEL: | K20 O34 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32106&r=ind |
| By: | Alexandra Moura; Carlos Oliveira |
| Abstract: | We consider an investment model in which a firm decides to invest in the market, taking into account its future revenue and the possible occurrence of adverse events that may impact its reputation. The firm can buy an insurance contract at the investment time to mitigate reputation risk. The firm decides when to enter the market and the insurance strategy that maximizes its value. We consider three types of insurance contracts and different premium principles. We provide analytical conditions for the optimum and study several numerical examples. Results show that the firm’s optimal strategy depends on the risk size, the firm’s risk aversion, and the insurance premium. |
| Keywords: | Reputaion Risk, Insurance, Risk Mitigation, Investment Strategies, Real Options. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp03092024&r=ind |
| By: | Itai Arieli; Yakov Babichenko; Omer Madmon; Moshe Tennenholtz |
| Abstract: | We consider a model of third-degree price discrimination, in which the seller has a valuation for the product which is unknown to the market designer, who aims to maximize the buyers' surplus by revealing information regarding the buyer's valuation to the seller. Our main result shows that the regret is bounded by $U^*(0)/e$, where $U^*(0)$ is the optimal buyer surplus in the case where the seller has zero valuation for the product. This bound is attained by randomly drawing a seller valuation and applying the segmentation of Bergemann et al. (2015) with respect to the drawn valuation. We show that the $U^*(0)/e$ bound is tight in the case of binary buyer valuation. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.16942&r=ind |
| By: | NIREI Makoto |
| Abstract: | This study estimates the degree of complementarity between firm investment spikes linked by production networks. A customer firm’s increase in capital by more than 20% (an investment spike) raises its future demand for intermediate inputs, increasing the likelihood of the supplier’s spike. Similarly, a supplier’s investment spike lowers the future cost of intermediate goods demanded by its customer and induces the customer’s investment spike. We use firm-level panel data from the Japanese business survey and transaction network data to estimate this complementarity in investment decisions. The estimates show that one firm’s investment spike induces, on average, 0.088 firms to conduct investment spikes, indicating that an investment spike shock can propagate through the production network to upstream and downstream firms. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24029&r=ind |
| By: | Christophe J. Godlewski (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg); Hong Nhung Le (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg) |
| Abstract: | We investigate the impact of family ties on the performance of family firms in East Asia. To measure family ties, we used both objective and subjective indicators from the World Value Survey. Our findings indicate that family firms that are nurtured in a society with strong family ties tend to have better performance compared to family firms that operate in a culture with weak family ties. Furthermore, family firms that have strong familial relationships are more likely to gain a competitive advantage over nonfamily firms. Conversely, family firms with weak ties tend to underperform nonfamily firms. Our results are robust across various measures of firm performance, classifications of family firm, considerations of heteroskedasticity and endogeneity, and different econometric methods. |
| Date: | 2024–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04435944&r=ind |
| By: | Antweiler, Werner; Muesgens, Felix |
| Abstract: | What happens to the merit order of electricity markets when all electricity is supplied by intermittent renewable energy sources coupled with large-scale electricity storage? With near-zero marginal cost of production, will there still be a role for an energy-only electricity market? We answer these questions both analytically and empirically for electricity markets in Texas and Germany. What emerges in market equilibrium is the 'new merit order'. Our work demonstrates that as long as free entry and competition ensure effective price setting, an efficient new merit order emerges in electricity markets even when the grid is completely powered by intermittent sources with near-zero marginal costs. We find that energy only markets remain viable and functional. |
| Abstract: | Was geschieht mit der Merit-Order, wenn die Stromnachfrage allein durch erneuerbare Energiequellen und große Stromspeicher gedeckt wird? Wenn die Grenzkosten der Erzeugung nahezu null sind, kann dann das bisherige Strommarktdesign des Energy-Only-Marktes noch aufrechterhalten werden? Dieser Artikel beantwortet diese Fragen sowohl analytisch als auch empirisch für die Strommärkte in Texas und Deutschland. Es zeigt sich, dass eine effiziente neue 'Merit-Order" entstehen würdet, wenn es freien Marktzugang und Wettbewerb auf den Strommärkten gibt, selbst wenn die Nachfrage vollständig von volatilen erneuerbaren Energie-Quellen mit Grenzkosten nahe Null bedient würde. Zudem zeigt sich, dass reine Energy-Only-Märkte auch weiterhin funktionieren würden. |
| Keywords: | Renewable energy, energy storage, electricity markets |
| JEL: | D47 Q41 Q42 L11 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:282991&r=ind |