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on Innovation |
| By: | Norbäck, Pehr-Johan; Persson, Lars |
| Abstract: | We construct a model where an entrepreneur could either innovate for entry or for sale. It is shown that increased product competition tends to increase the relative profitability of innovation for sale relative to entry. Increased competition reduces entrants' and acquirers' profits in a similar fashion, but also reduces the profit of non-acquirers. Therefore, incumbents' valuations of innovations are less negatively affected by increased competition than entrants' profits. This, in turn, implies that the incentive for innovation for sale can increase with increased competition. Finally, we show that a stricter, but not too strict, merger policy tends to increase the incentive for innovations for sale by ensuring the bidding competition for the innovation, without reducing the total rents for innovations too much. |
| Keywords: | Antitrust; Competition; Competition Policy; Entrepreneurs; Innovations |
| JEL: | L13 L40 O31 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6823&r=ino |
| By: | Luca Colombo (DISCE, Università Cattolica); Herbert Dawid (Universität Bielefeld) |
| Abstract: | In this paper we examine in a game theoretic framework in how far market conditions facilitating start-up formation positively affect technical change and firms' profits. We consider a model in which R&D efforts of an incumbent firm generate technological know-how embodied in key R&D employees, who might use this know-how to form a start-up. Market conditions, in particular the availability of complementary assets, influence whether new firms are created and determine expected profits for start-up-founders. Easy availability of complementary assets has the direct effect that the generation of start-ups, which leads to the diffusion and duplication of know-how, is fostered. However, incentives of incumbent firms to invest in R&D might be reduced because of the increased danger of knowledge loss through spin-out formation. We fully characterize the effects of an increase in the availability of complementary assets, demonstrating that under certain market conditions the effects on innovative activities and industry profits can be negative. |
| Keywords: | Complementary Assets, Technical Change, R&D Effort, Startup |
| JEL: | L20 M13 O30 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie3:ief0080&r=ino |
| By: | Nicolas van Zeebroeck (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Bruno van Pottelsberghe (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels, DULBEA, Université Libre de Bruxelles and ECARES, Université Libre de Bruxelles.) |
| Abstract: | This paper aims at contributing to the literature on the determinants of patent value. First, it puts forward a new potential class of value determinants in the form of filing strategies (encompassing filing routes and drafting styles). Second, it provides empirical evidence suggesting that these strategies are consistently and positively associated with patent value indicators. The empirical implementation relies on a unique dataset (about 250,000 patents granted by the EPO), which allows running large-scale sensitivity tests. The results reveal that the new determinants this paper puts forward –filing strategies – are the most stable of all. They also underline strong dependencies of several ‘classical’ results to the dependent variables and sampling methodologies, partly explaining several inconsistencies observed in the literature. |
| Keywords: | Patent systems, Patent quality, Patent value, Filing strategies |
| JEL: | O31 O34 O50 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:08-016&r=ino |
| By: | Tebaldi, Edinaldo; Elmslie, Bruce |
| Abstract: | This paper contributes to the literature on institutions and economic growth by conducting an empirical examination on the links between innovation and institutions. Using cross-country data and the instrumental variable method, this study finds that institutional arrangements explain much of the variation on patent production across countries. We find evidence that control of corruption, market-friendly policies, protection of property rights and a more effective judiciary system boost an economy’s rate of innovation. Most of the previous literature on institutional and economic performance finds a positive association between institutions and levels of income and between institutions and the transitional growth rates of per capita income; however an unambiguous empirical association between institutions and the steady state growth has not yet been established. Based on the theoretical model developed by Tebaldi and Elmslie (2006), which shows that the impacts of institutions on innovation spillover to the growth rate of GDP per capita, this paper shows evidence of a growth effect through innovation, i.e., institutions have a growth effect on income because institutional quality affects an economy’s rate of innovation, the engine of economic growth. Moreover, this study finds that controlling for institutional quality; geographic-related variables are not significant in explaining patent production. This paper also finds evidence to support the idea that in the long-run human capital accumulation is an important variable in shaping institutions. |
| Keywords: | Institutions; innovation; economic growth |
| JEL: | O43 O33 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8757&r=ino |
| By: | Böckerman, Petri; Eero , Lehto; Huovari, Janne |
| Abstract: | This paper examines, through the use of plant-level data, whether R&D’s productivity impact is contingent on the distance of a plant’s productivity from the industry’s technological frontier. R&D is specified as an accumulated stock from R&D investments. We analyse the productivity effect of a plant’s own R&D as well as the productivity impact of the plant’s parent firm’s and other firms’ proximity-weighted R&D stocks. The results show that a plant’s own and a parent firm’s R&D have a positive productivity impact and that the former impact decreases as the distance from the industry’s technological frontier increases. Furthermore, the productivity effect of other firms’ proximity-weighted R&D is, on average, positive, but this impact increases in the distance from the technological frontier. Another important finding is that all the plants tend to converge towards the industry’s technological frontier despite the size of external R&D spillovers. |
| Keywords: | productivity; efficiency; technological frontier; spillovers; convergence |
| JEL: | D24 L00 |
| Date: | 2008–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8715&r=ino |