nep-ino New Economics Papers
on Innovation
Issue of 2005‒08‒03
seven papers chosen by
Koen Frenken
Universiteit Utrecht

  2. Vertical and Horizontal Innovation : Effects of Globalization and Migration on Inequality, Growth and Human Capital Accumulation By Luca, Spinesi
  3. Beggar thy neighbor? the in-state vs. out-of-state impact of state R&D tax credits By Daniel J. Wilson
  4. Migration and technological change in rural households: complemen ts or substitutes? By Mariapia MENDOLA
  5. On Tariff, Quality Choice and Innovation in a Vertically Differentiated Monopoly with Discrete Preferences By Rajat Acharyya; Swapnendu Banerjee
  6. The Debate and the Community. The “Reflexive Identity” Concept and the FLOSS Community Case. By Francesco Rullani
  7. Indicators for Complex Innovation Systems By Sylvan Katz

  1. By: Maria Belen Usero; Zulima Fernandez
    Abstract: This study examines the relationship between erosion of the first-mover’s market share and the differences in competitive behaviour of pioneer firms and followers. Particularly, we pay particular attention to market actions related to innovation, pricing and promotion, and to non-market actions related to judicial issues. The empirical study has been carried out with companies that are present in a dynamic context, such as the European mobile telephone industry. Our results show that when followers take more non-market actions than pioneers the negative effect on the firstentrant’s advantage is more significant. On the contrary, we have not found a significant impact of innovating and pricing actions.
    Date: 2005–07
  2. By: Luca, Spinesi
    Abstract: In this paper I consider two symmetric countries/regions which trade in final goods. In each country is active the manufacturing sector and both vertical and horizontal innovation conduced by individuals with heterogenous ability. I show that a more globalized world, as represented by lower iceberg-type transportation cost, spurs human capital accumulation, and widens skill premium within each country. However, it may be the case that globalization reduces the per-capita output growth rate of each region, but has positive effect on output level. Moreover, when a region has larger domestic market it also has higher human capital accumulation, higher skill premium, and higher per-capita mass of product lines, i.e. the country with larger domestic market invents a larger mass of varieties. This implies that skilled labor force residing in larger domestic market benefits of higher consumption flows. I show that even if a country has larger domestic market full agglomeration of either activity does not happen : both the regions remain active in both manufacturing and R&D. I show that the same result hold in the case of localized spillovers and specialized knowledge between regions.
    Keywords: R&D and Growth,;Globalization; Migration
    Date: 2005–05–18
  3. By: Daniel J. Wilson
    Abstract: In this paper, I exploit the cross-sectional and time-series variation in R&D tax credits, and in turn the user cost of R&D, available from U.S. states between 1981-2002 to estimate the elasticity of private R&D with respect to both the within-state (internal) user cost and the out-of-state (external) user cost. To faciliate comparisons to previous studies of the R&D cost elasticity, I first estimate an R&D cost elasticity omitting external R&D costs; the estimated elasticity is negative, above unity (in absolute value), and statistically significant—a finding quite similar to that found by previous studies based on alternative data. Unlike previous studies, however, I then add the external R&D user cost to the regressions. I find the external-cost elasticity is positive and significant, raising concerns about whether having state-level R&D tax credits on top of federal credits is socially desirable. More importantly, I find the aggregate R&D price elasticity—the difference between the internal- and external-cost elasticities—is far smaller than previously estimated. In fact, the preferred specification yields a zero aggregate elasticity, suggesting a zero-sum game among states and raising questions about the efficacy of R&D tax credits more broadly.
    Keywords: Taxation ; Research and development
    Date: 2005
  4. By: Mariapia MENDOLA
    Abstract: In this paper we study the interrelationship between determinants of migration, conceived as a family strategy, and the potential impact of having a migrant household member on people left behind . Labour migration is often related to poverty but given its lump y-investment nature, poverty may constitute a motivation to migra te as well as a constraint to do it. We use cross-sectional house hold data from two rural regions of Bangladesh to test whether mi gration is a form of income diversification strategy that signifi cantly influences the risk-taking behaviour of source farm househ olds in agricultural activities. We account for heterogeneity of migration constraints differentiating between domestic (temporary and permanent) and international moving destinations. We find th at richer and large-holder households are more likely to particip ate in costly high-return migration (i.e. international migration ) and employ modern technologies, thereby achieving higher produc tivity. Poorer households, on the other hand, are not able to ove rcome entry costs of moving abroad and fall back on migration wit h low entry costs, and low returns (i.e. domestic migration); the latter does not help them to achieve production enhancements and may act as a poverty-trap locking households into persistent pov erty.
    Keywords: Internal and International Migration, Farm Household Behaviour, Agricultural Production Choices.
  5. By: Rajat Acharyya (Jadavpur University); Swapnendu Banerjee (National University of Singapore)
    Abstract: In a vertically differentiated monopolistic framework with discrete preferences we examine how protecting the low-quality segment raises the incentive for quality innovation. We show how the monopolist facing competitive imports, might fail to exert its complete monopoly power even if there is prohibitive tariff on both the high and low quality segment of the market. On the other hand, given non prohibitive tariff on the high quality segment, the potential gain for the monopolist exhausts at a level much below the prohibitive low-quality tariff level. Also a sufficiently low tariff on the high quality product can force the monopolist to produce the first best qualities irrespective of the tariff level on the low quality product
    Keywords: F13, L12, L15
  6. By: Francesco Rullani
    Abstract: The empirical studies relative to the Free/Libre/Open Source Software (FLOSS) case stress the important role played by psychological and social motivations. However, the theories elaborated to cope with this dimension, such as “gift economy”, “epistemic community” or “community of practice”, are not combined into a unique structured framework. It is possible to draw inspiration from philosophical studies about language and from sociological studies about collective action in order to construct a mechanism –here called “reflexive identity”- able to bridge the analyzed theories and to explain the empirical evidences left aside by self-supply, reputation and signaling. The reflexive identity mechanism is triggered by the dialog between the members. In order to simply communicate, in fact, members have to “negotiate” the system of meanings they use to interface with the world and with the communitarian environment. But this means reshaping also their own vision of the world, redefining their identity. Community aims, principles and ethos act directly on members’ identity, making them internalize the communitarian structure of rules. The reflexive identity principle, then, merges the psychological and social dimension of the FLOSS phenomenon with the structure of rules adopted by the FLOSS community, and thus it constitutes together with self-supply, signaling, reputation and peer regard the basis upon which the FLOSS community is built.
    Keywords: Free, Open Source, Software, Motivation, Incentive, Social Interaction, Identity, Production Model, Innovation.
  7. By: Sylvan Katz (SPRU, University of Sussex)
    Abstract: Innovation systems are complex systems that can exhibit scaling and emergent properties. Predictable and measurable scaling correlations exist between measures commonly used to characterize innovation systems and national economies. This paper examines scaling relationships between GERD & GDP and between GDP & population and uses them to construct scale-independent indicators of the European and Canadian innovation systems. It discusses the theory and practice of building scale- independent indicators and scale-independent models. The theory is based on knowledge gathered from the study of complex systems. The practice is illustrated using OECD and Statistics Canada data commonly used to construct conventional indicators.
    Keywords: complex system, scaling, power law, emergent properties, innovation, innovation system, indicators, scale-independent, model
    JEL: O33
    Date: 2005–07–26

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