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on Industrial Organization |
| By: | Nicolas Pasquier |
| Abstract: | Traditional firms competing in a primary market may expand into a secondary market that generates user data and enhances the quality of the primary product. This paper examines how competition between such rival ecosystems affects market outcomes and welfare. Using a Hotelling framework with two symmetric ecosystems that each offer a primary product and a secondary data-rich product, I show that the size of the secondary market is key. When the secondary market is small, ecosystems invest less in quality than in a benchmark with only a primary market and earn higher profits at the expense of consumers. As the secondary market grows, quality investment rises and the welfare ranking can reverse. I further show that expansion into a secondary market need not create a trade-off between profits and consumer surplus: when the ecosystems’ secondary products are sufficiently differentiated, both profits and consumer surplus can exceed their benchmark levels. These findings inform policy debates on digital adoption, market structure, and ecosystem regulation. |
| Keywords: | Competing Ecosystems, Quality Investment, Data-Driven Quality |
| JEL: | L13 L51 D43 O31 Q16 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:gbl:wpaper:2026-03 |
| By: | Aigerim Yergabulova (Nazarbayev University, Graduate School of Business) |
| Abstract: | A high price-cost margin is commonly read as evidence of market power. We show that where production is concentrated in capital-intensive sectors, this reading conflates two distinct objects: the coverage of fixed costs and residual economic rent. Using confidential firm-level microdata from Kazakhstan over 2009-2023 and a within-margin decomposition, we find an aggregate price-cost margin of 62 percent, roughly 2.4 times a mature-economy benchmark. Fixed costs absorb about 91 percent of that gap, and the residual excess-profit share, +5.5 percent, is statistically above zero but not distinguishable from the benchmark. The high aggregate margin reflects the capital intensity of production rather than economy-wide rent. The rent that does exist is concentrated in mining and foreign-controlled extractive firms rather than spread across the economy. Where production is capital intensive, high price-cost margins need not indicate economy-wide rent extraction. |
| Keywords: | markups, price-cost margin, market power, Solow residual, fixed costs, transition economies |
| JEL: | D24 D43 L11 L40 P23 P52 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2026-10 |
| By: | Lai, Ching-Chong; Lai, Ting-Wei; Yu, Po-yang |
| Abstract: | Existing studies on Schumpeterian growth theory unanimously specify new entrants’ creative destruction behavior in an ad hoc manner. However, this specification fails to reflect the fact that the replacement of incumbents by new entrants is essentially an optimal decision-making process. To overcome this deficiency, this paper develops a Schumpeterian growth model in which creative destruction arises endogenously from the optimal decision-making of entrant R&D firms, rather than being imposed in an ad hoc manner. The model is then used to examine how R&D-related policies—including patent protection and corporate profit taxation—as well as entry sunk costs affect entrants’ creative-destruction behavior, economic growth, and social welfare. Our theoretical analysis shows that a higher corporate profit tax rate or a higher marginal entry cost reduces the mass of potential new entrants, the optimal probability of creative destruction, and the balanced growth rate, whereas stronger patent protection raises these macroeconomic variables. In addition, our numerical welfare analysis finds that the magnitude of the marginal market entry cost plays a crucial role in determining the optimal levels of patent protection and corporate profit taxation. |
| Keywords: | R&D policies, Creative destruction, Economic growth, Social welfare |
| JEL: | L11 O31 O41 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128983 |
| By: | Luca Fornaro; Veronica Guerrieri; Will Hotten; Lucrezia Reichlin |
| Abstract: | This paper studies how financial conditions affect research and development (R&D) by firms specialized in green innovation. Using U.S. patent data matched with Compustat, we identify “green innovators” as firms with a high cumulative share of green patents. Although they account for a small share of total green patenting, these firms occupy central positions in the green-innovation ecosystem. Estimating firm-level impulse responses to exogenous changes in broad financial conditions, we find that tightening has a disproportionately large and persistent negative effect on the R&D of specialized green innovators. In contrast, R&D by diversified innovators and non-innovators responds only weakly. Green innovators are younger, smaller, and more dependent on external finance, suggesting that financial tightening introduces a systematic bias against upstream green technological development. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1946 |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics) |
| Abstract: | This paper analyzes Sweden’s entrepreneurial performance from an institutional and evolutionary perspective, using the concept of the collaborative innovation bloc. It argues that economic development is driven not by entrepreneurial entry per se, but by the capacity of institutional arrangements to channel entrepreneurial effort into large-scale, productivity-enhancing activities. Sweden provides an instructive case: despite strong performance in innovation and start-up formation, the economy performs less well in turning young firms into globally competitive enterprises. The analysis emphasizes the complementarity between entrepreneurs and key actors - investors, skilled employees, and competent customers - and the role of institutional incentives in coordinating their interaction over time. While past reforms have improved conditions for entry, remaining distortions in taxation, labor market regulation, and capital allocation may bias outcomes toward early exit rather than sustained growth. |
| Keywords: | collaborative innovation bloc, entrepreneurial ecosystem, entrepreneurship policy, scale-up policy, innovative entrepreneurship |
| JEL: | H50 I28 L26 O31 P16 R38 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18664 |
| By: | Kathryn Andrews; Fabiano Dal-Ri; Roberta Gatti; Renata Lemos; Mario Macis; Lydia Nakhone |
| Abstract: | This paper measures and analyzes management practices in the Kenyan health care sector, drawing on a nationally representative survey and linked administrative data. The paper adapts the World Management Survey to measure management quality in primary health care facilities and hospitals, surveying 429 primary health care facilities and 73 hospitals. Primary health care facilities are the primary point of contact for most patients, providing treatment for common infectious diseases and chronic conditions, as well as services related to maternal and child health. Management quality is low on average, and the distribution is highly compressed. The analysis uses administrative data to test the association between the management quality and performance of primary health care facilities, measured by outpatient attendance, during a period of disruption that included the COVID-19 pandemic and a public health workers’ strike. Overall attendance fell during this period. Private facilities experienced a smaller decline than public facilities, consistent with substitution during the strike. Within the private sector, better-managed facilities showed greater resilience, driven primarily by operations management. These results underscore the role of management quality in strengthening facility-level resilience and the complementarity of public and private sectors in absorbing healthcare shocks. |
| JEL: | I15 L32 M10 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35223 |