nep-ino New Economics Papers
on Innovation
Issue of 2014‒12‒29
24 papers chosen by
Steffen Lippert
University of Auckland

  1. Inventing in the Shadow of the Patent System: Evidence from 19th-Century Patents and Prizes for Technological Innovations By B. Zorina Khan
  2. Direct and Cross-Scheme Effects in a Research and Development Subsidy Program By Hottenrott, Hanna; Lopes Bento, Cindy; Veugelers, Reinhilde
  3. China's R&D subsidies: Allocation and effectiveness By Boeing, Philipp
  4. Transition to Clean Technology By Daron Acemoglu; Ufuk Akcigit; Douglas Hanley; William Kerr
  5. Innovation and its Effects on Employment Composition: Microeconomic Evidence from Colombian Firms By Juan Felipe Mejía Mejía; Yurani Arias Granada
  6. Research and Development of an Optimally Regulated Monopolist with Unknown Costs By SAGLAM, ISMAIL
  7. Smart Specialisation in the EU: Is it a Bridge between Innovation and Cohesion? By Argentino Pessoa
  8. Innovation and export in SMEs: the role of relationship banking. By Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
  9. Transitional Dynamics in an R&D-based Growth Model with Natural Resources. By Thanh Le; Cuong Le Van
  10. Smart Specialisation and Innovation in Rural Areas By Artur da Rosa Pires; Martina Pertoldi; John Edwards; Fatime Barbara Hegyi
  11. Taxation, Innovation, and Entrepreneurship By Hans Gersbach; Ulrich Schetter; Maik T. Schneider
  12. A field experiment in motivating employee ideas By Gibbs, Michael; Neckermann, Susanne; Siemroth, Christoph
  13. The Shaping of Skills:Wages, Education, Innovation By Valeria Cirillo; Mario Pianta; Leopoldo Nascia
  14. Knowledge Spillovers in Cities: The Role of Imitation and Innovation By Dirk Assmann; Johannes Stiller
  15. The Republic of Open Science - The institution’s Historical Origins and Prospects for Continued Vitality By Paul David
  16. The fine microstructure of knowledge creation dynamics: reporting further advances By Marcus Berliant; Masahisa Fujita
  17. The Effect of (Mostly Unskilled) Immigration on the Innovation of Italian Regions By Massimiliano Bratti; Chiara Conti
  18. Licensing to vertically related markets By SCHOLZ, Eva-Maria
  19. When is it Better to Wait for a New Version? Optimal Replacement of an Emerging Technology under Uncertainty By Chronopoulos, Michail; Siddiqui, Afzal
  20. Essays on sustainable supply management By Koster, H.R.
  21. Märkte und Macht der Internetkonzerne: Konzentration - Konkurrenz - Innovationsstrategien By Dolata, Ulrich
  22. Global trajectories, dynamics, and tendencies of business software piracy: benchmarking IPRs harmonization By Simplice Anutechia Asongu; Antonio Andrés
  23. Benchmark Value Added Chains and Regional Clusters in German R&D Intensive Industries By Reinhold Kosfeld; Mirko Titze
  24. Decreasing Return of Intra-industry R&D and Economic Growth By Liu, Haiyang

  1. By: B. Zorina Khan
    Abstract: Such institutions as patent systems cannot be well understood without an assessment of technological creativity in other contexts. Some have argued that prizes might offer superior alternatives to the award of property rights in inventions. Accordingly, this paper offers an empirical comparison of patents in relation to the award of prizes for technological innovation. The data set comprises a sample of patents, as well as exhibits and prizes at annual industrial fairs in Massachusetts over the course of the nineteenth century. The patterns shed light on the factors that influenced how specific inventions and inventors attempted to appropriate returns. Prizes in general provided valuable prospects for advertisements and commercialization, rather than inventive activity per se. Prize winners typically belonged to more privileged classes than the general population of patentees, as gauged by their wealth and occupational status. Moreover, the award of prizes tended to largely unpredictable, and was unrelated to such proxies for the productivity of the innovation as inventive capital or the commercial success of the invention. Prize-oriented institutions thus appear to be less systematic and not as market-oriented as patent systems. If inventors respond to expected returns, prizes may be less effective at inducing technological creativity.
    JEL: K11 N11 O31 O34
    Date: 2014–12
  2. By: Hottenrott, Hanna; Lopes Bento, Cindy; Veugelers, Reinhilde
    Abstract: This study investigates the effects of an R&D subsidy scheme on participating firms’ net R&D investment. Making use of a specific policy design in Belgium that explicitly distinguishes between research and development grants, we estimate direct and cross-scheme effects on research versus development intensities in recipients firms. We find positive direct effects from research (development) subsidies on net research (development) spending. This direct effect is larger for research grants than for development grants. We also find cross-scheme effects that may arise due to complementarity between research and development activities. Finally, we find that the magnitude of the treatment effects depends on firm size and age and that there is a minimum effective grant size, especially for research projects. The results support the view that public subsidies induce higher additional investment particularly in research where market failures are larger, even when the subsidies are targeting development.
    Keywords: complementarity; development subsidies; innovation policy; R&D; research subsidies
    JEL: H23 O31 O38
    Date: 2014–10
  3. By: Boeing, Philipp
    Abstract: This study investigates the allocation of China's R&D subsidies and its effectiveness in stimulating firms' own R&D investments for the population of Chinese listed firms throughout the time period 2001 to 2006. For allocation, we find that firm participation is determined by prior grants, high quality inventions, and minority state-ownership. Provincial variation in China's transition towards a market-driven economy reveals that R&D subsidies are less often distributed by more market-oriented provincial governments and that China's innovation policy is more supportive of firms located in developed provinces. Considering effectiveness, we find that grants instantaneously crowd-out firms' own R&D investments but are neutral in later periods. In 2006, one public RMB reduces own R&D investments made by firms by half a RMB. For repeated recipients, high-tech firms, and minority state-owned firms grants have an insignificant effect.
    Keywords: R&D subsidies,economic transition,China,propensity score matching,difference-in-differences
    JEL: O38 O32
    Date: 2014
  4. By: Daron Acemoglu (Department of Economics, MIT and CIFAR); Ufuk Akcigit (Department of Economics, University of Pennsylvania); Douglas Hanley (Department of Economics, University of Pittsburgh); William Kerr (Harvard Business School, Harvard University)
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies complete in production and innovation - in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up withdirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model’s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2014–12–03
  5. By: Juan Felipe Mejía Mejía; Yurani Arias Granada
    Abstract: This study analyses the effects of innovation on employment in Colombian firms for the man- ufacturing and service sectors in two different periods: 2007-2010 for the manufacturing industry, and 2010-2011 for the service industry. Based on the theoretical framework proposed by Harri- son et al.(2014), we test this relationship using instrumental variables techniques. Data proceed from The Annual Manufacturing Survey, The Development and Technological Innovation Indus- trial Survey, and The Development and Technological Innovation Services Survey, all of them collected by the Colombian National Administrative Department of Statistics (DANE).Our em- pirical results show that sales growth due to new products positively affects employment growth, and process innovation has not a displacement effect on employment growth. This is robust to different specifications and the inclusion of control variables.
    Keywords: Employment Growth, Process Innovation, Product Innovation, Colombian Firms
    JEL: O31 O33
    Date: 2014–12–06
    Abstract: This paper studies whether a monopolist with private marginal cost information has incentives to make cost-reducing innovations through research and development (R&D) when its output and price are regulated according to the incentive-compatible mechanism of Baron and Myerson (1982). Under several assumptions concerning the cost of R&D and the regulator's beliefs about the marginal cost, we characterize the optimal level of R&D activities for the regulated monopolist when these activities are observed by the regulator as well as when they are not. We show that the regulated monopolist always chooses a higher level of R&D activities when its activities are unobserved. In situations where the social welfare attaches a sufficiently high weight to the monopolist welfare, the monopolist's R&D activities in the unobservable case even realize at a higher level than its activities when its output and price are not regulated. Moreover, whenever R&D activities increase productive efficiency, a less efficient monopolist would choose a higher level of R&D activities than a more efficient monopolist, irrespective of the observability of R&D.
    Keywords: Monopoly; Regulation; Research and Development.
    JEL: D82 L51 O32
    Date: 2014–11–27
  7. By: Argentino Pessoa
    Abstract: Current innovation policy is the result of decades of research about the nature and role of innovation in economic growth. Such investigation has contributed to redesign our knowledge not only on the role played by innovation in economic development but also about the relationship between innovation and territory. Although the huge literature examining the relationships between territory and innovation has shown abundant evidence that certain regions are systematically more innovative than others the reasons for this dissimilarity go on being controversial. But, whatever the reason, the propensity for generation or absorption of innovation differs clearly between regions with some regions being characterised more by innovation-using rather than innovation-producing activities and others by a complete absence of innovation. Resulting from the criticisms to former policy approaches and from theoretical and empirical developments, the concept of ?smart specialisation' appeared and has gained significant political prominence in the European Union (European Commission, 2010; McCann and Ortega-Argilés, 2011). Although regions in many parts of the world are showing interest in the smart specialisation policy approach (OECD, 2012), it is Europe that takes the lead in this type of strategy, feeding high expectations about the results of this approach. In fact, European Commission sees smart specialisation as ?the basis for European Structural and Investment Fund interventions in research and innovation considered as part of the future Regional Policy's contribution to the Europe 2020 jobs and growth agenda'. Furthermore, the EC goes beyond the innovation policy domain and describes smart specialisation as involving ?a process of developing a vision, identifying competitive advantage, setting strategic priorities and making use of smart policies to maximise the knowledge-based development potential of any region, strong or weak, high-tech or low-tech'(S3 Platform website). This paper looks at the capacity of the smart specialization approach to attain the aims that it alleges to pursue, namely the aptitude to simultaneously respond to cohesion and innovation, questioning if smart specialization is able to bridge efficiency and equity which inspire innovation and cohesion, respectively.
    Keywords: Cohesion policy; European Union; Innovation; smart specialisation.
    JEL: O31 O33 R11 R58
    Date: 2014–11
  8. By: Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
    Abstract: This paper assesses the role of relationship lending in explaining simultaneously the innovation activity of Small and Medium Enterprises (SME), their probability to export (i.e. the extensive margin) and their share of exports on total sales conditional on exporting (i.e. the intensive margin). We adopt a measure of informational tightness based on the ratio of firm’s debt with its main bank to firm’s total assets. Our results show that the strength of the bank-firm relation has a positive impact on both SME’s probability to export and their export margins. This positive effect is only marginally mediated by the SME’s increased propensity to introduce product innovation. We further discuss the financial and non-financial channels through which the intensity of bank-firm relationship supports SMEs’ international activities.
    Keywords: margins of export, bank-firm relationships, innovation, localized knowledge spillovers.
    JEL: F10 G20 G21 O30
    Date: 2014–10
  9. By: Thanh Le (University of Queensland); Cuong Le Van (Centre d'Economie de la Sorbonne - Paris School of Economics, IPAG and VCREME)
    Abstract: Upon introducing natural resources, both renewable and non-renewable, into an endogenous growth framework with R&D, this paper derives the transitional dynamics of an economy towards its long-run equilibrium. Using the Euler - Lagrange framework, this paper has succesfully figured out the optimal paths of the economy. It then shows the existence and uniqueness of a balanced growth path for each type of resources. The steady state is shown to be of a saddle point stability. Along the balanced growth path, it is found that a finite size resource sector coexists with other continuously growing sectors. The paper then examines long-run responses of the economy to various changes pertaining to innovative production condition, resource sector parameters as well as rate of time preference. It also shows that positive long-run growth will be sustained regardless the type of resources used.
    Keywords: R&D-based growth, natural resources, vertical innovation, transitional dynamics.
    JEL: O13 O31 O41
    Date: 2014–10
  10. By: Artur da Rosa Pires (University of Aveiro); Martina Pertoldi (European Commission – JRC - IPTS); John Edwards (European Commission – JRC - IPTS); Fatime Barbara Hegyi (European Commission – JRC - IPTS)
    Abstract: This Policy Brief has the twin aims of showing that Research and Innovation Strategies for Smart Specialisation (S3), despite their sectoral origins, provide a favourable and supportive framework for innovation in rural areas and, on the other hand, that there is a wide range of innovation activities in rural areas, often unmentioned in the innovation policy literature, which can strongly benefit from and reinforce the impact of the new generation of European Regional Policy. The paper discusses the most significant elements of S3 related to regional development in rural areas, presenting the main challenges and opportunities for knowledge-led development with reference to both the current policy and theoretical landscapes and some relevant emerging regional experiences. In particular, we investigate how the main novelties of S3 seem able to overcome the urban bias of past innovation policies, when the rural dimension of innovation has often been neglected, affecting its contribution to economic growth and regional development related to rural resources and actors.
    Keywords: Smart specialisation, rural innovation, regional development, cross-sectoral policy alignment.
    Date: 2014–11
  11. By: Hans Gersbach (ETH Zurich, Switzerland); Ulrich Schetter (ETH Zurich, Switzerland); Maik T. Schneider (ETH Zurich, Switzerland)
    Abstract: We explore optimal and politically feasible growth policies in the form of basic research investments and taxation. Basic research is a public good that benefits innovating entrepreneurs, but its provision and financing also affect the entire economy -- in particular, occupational choices of potential entrepreneurs, wages, dividends, and aggregate output. We show that the impact of basic research on the general economy rationalizes a taxation pecking order to finance basic research. More specifically, in a society with desirably dense entrepreneurial activity, a large share of funds for basic research should be financed by labor taxation, while a minor share should be left to profit taxation. Such tax schemes will induce a significant proportion of agents to become entrepreneurs, thereby rationalizing substantial investments in basic research that fosters their innovation prospects. These entrepreneurial economies, however, may make a majority of workers worse off, giving rise to a conflict between efficiency and equality. We discuss ways of mitigating this conflict and thus strengthening the political support for growth policies.
    Keywords: Basic research; economic growth; entrepreneurship; income taxation; political economys;
    JEL: D72 H20 H40 O31 O38
    Date: 2014–12
  12. By: Gibbs, Michael; Neckermann, Susanne; Siemroth, Christoph
    Abstract: We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.
    JEL: C93 J24 M52 O32
    Date: 2014
  13. By: Valeria Cirillo (Department of Statistical Sciences, Sapienza University of Rome); Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Leopoldo Nascia (Istituto Nazionale di Statistica)
    Abstract: This paper investigates the role of wages, education and innovation in shaping employment structures in manufacturing and services of five European countries (Germany, France, Spain, Italy and United Kingdom), with specific respect to skills in the long term (1999-2011). Using data on employment by skill level and several measures of industries’ technological efforts provided by four waves of Community Innovation Survey, we study the relationship between micro and macro factors and employment dynamics by skill. As micro factors, we consider the role of education and wages by employee; as macro elements we study the role of technologies and demand shaping job growth by skill group. Relying on a sectoral demand curve deriving from a translong cost function, we empirically estimate the relationship between wages, education, technologies, demand and employment. The results reveal that skills are differently affected by education, wages and technologies and a variety of employment patterns has to be detected. In 1999-2011, manufacturing shows a pattern of relative skill upgrading; conversely a smoothed polarizing trend is detected in services. While a process of relative skill upgrading is detected in manufacturing; conversely a smoothed polarizing trend is detected in services.
    Keywords: Innovation; Labor markets, Wages, Education.
    JEL: J31 O30
    Date: 2014
  14. By: Dirk Assmann; Johannes Stiller
    Abstract: The aim of this paper is to develop a spatial model that explicitly incorporates the different types of knowledge spillovers taking place in cities and to show how they affect the migration decision of individuals and the size of cities. We use a static general equilibrium framework with two types of labor (highly and less educated) and two asymmetric locations: The city and the periphery, where only the city provides highly educated workers with the opportunity to exchange knowledge via face-to-face interactions. Our model incorporates two forms of knowledge spillovers happening in these meetings whose intensities are dependent on the similarity of knowledge background of the interacting individuals: First, the individual build-up of skills through the process of learning increases in the similarity of knowledge backgrounds. And second, innovative output generated in a meeting decreases in the similarity of knowledge backgrounds. This reflects the general sentiment that diversity stimulates the emergence of groundbreaking innovations. We see that highly educated workers only focus on the build-up of their personal skills when deciding about the range of individuals in the city they accept to be matched with, whereas innovative output is seen as a by-product of the process of learning. The interplay of agglomeration and dispersion forces determines the allocation of workers in the spatial equilibrium. Moving to the city gives them the chance to increase their personal effectiveness through the process of learning in face-to-face meetings. On the other hand there are two dispersion forces at work: First, the crowding effect in the regional housing and decreasing returns to scale to supplied work. However, the equilibrium allocation of workers across the two regions is socially inefficient. As mentioned above highly educated workers only focus on the build-up of personal skills since the increase in personal effectiveness is directly compensated by firms. A Social Planner however, would recognize that meetings between more diverse individuals in the city would have a positive impact on innovative output. This inefficient decision additionally implicates that agglomeration forces do not reach their optimal extent and create cities that are smaller than socially optimal. The intuition behind this result is simple. People move to the city to maximize their personal outcome, but do not take into account their impact on the emergence of innovations, that are available for everyone. We are the first to explicitly model the impact of different forms of knowledge spillovers on agglomeration forces. We believe that our model's insights on the microfoundations of different types of knowledge spillovers provide a valuable contribution to the understanding of empirical observations like the skill and urban wage premium, because it offers the possibility to look at the forces at work affecting the empirical findings.
    Keywords: Imitation; Innovation; Matching; Knowledge Spillovers;
    JEL: R12 J24
    Date: 2014–11
  15. By: Paul David (Stanford University)
    Abstract: In most modern economies scientific and technological research activities are conducted in two distinct organizational modes: commercially oriented R&D based upon proprietary information, and noncommercial “open science.” When taken together and kept in proper balance, these form a complementary pair of institutionally differentiated sub-systems. Each can work to amplify and augment the productivity of the other, thereby spurring long-term economic growth and improvements of social welfare in knowledge driven societies. This paper considers the difference between historical origins of open science and its modern, critically important role in the allocation of research resources. The institutional structure of ‘The Republic of Open Science’ generally is less well understood and has less robust self-sustaining foundations than the familiar non-cooperative market mechanisms associated with proprietary R&D. Although they are better suited for the conduct of exploratory science, they also remain more vulnerable to damages from collateral effects of shifts in government policies, particularly those that impact their fiscal support and regulatory environments. After reviewing the several challenges that such policy actions during the 20th century’s closing decades had posed for continued effective collective explorations at the frontiers of scientific knowledge, the discussion examines the responses that those developments elicited from academic research communities. Those reactions to the threatened curtailment of timely access to data and technical information about new research methods and findings took the form of technical and organizational innovations designed to expand and enhance infrastructural protections for sustained open access in scientific and scholarly communications. They were practical, “bottom-up” initiatives to provide concrete, domain relevant tools and organizational routines whose adoption subsequently could be, and in the event were reinforced by “top-down” policy guidelines and regulatory steps by public funding agencies and international bodies. The non-politicized nature of that process, as well as its largely effective outcomes should be read (cautiously) as positive portents of the future vitality of the Republic of Open Science – and of those societies that recognize, protect and adequately support this remarkable social innovation.
    Keywords: science and technology policy, open science, new economics of science, evolution of institutions, patronage, asymmetric information, principal-agent problems, common agency contracting, social networks, ‘invisible colleges,’ scientific academies, intellectual property rights, anti-commons, contractual construction of commons  
    JEL: D8 H4 O3
    Date: 2014–08
  16. By: Marcus Berliant; Masahisa Fujita
    Abstract: This paper presents a new framework for modeling the fine microstructure of knowledge creation dynamics. Our focus is on the creation of working nowledge used in innovation, for example, the knowledge used by a researcher in the economics profession. The framework has been developed to address the following questions: What is the appropriate way to model the operational structure of working knowledge? How are specific new ideas, research papers, and patents created by a research worker or a group of them, based on the current stock of knowledge? What roles do dynamics, heterogeneity of ideas, heterogeneity of researchers, and cities or regions play? Using our framework, first we study how a researcher creates a new literature, choosing new assumptions, models, implications, and observations in each step. Next, we examine how two researchers interact in creating new complete literatures together. Finally, we discuss how to extend the analysis to N-person case in multiple cities or regions. In the last NARSA meetings in Atlanta, we presented preliminary results on the same topic. In this paper, we report further advances on modeling the fine microstructure of knowledge creation dynamics.
    Keywords: knowledge creation; dynamics; cities; regions
    Date: 2014–11
  17. By: Massimiliano Bratti; Chiara Conti
    Abstract: Immigration has recently been at the centre of the political and economic agenda. Economists have studied extensively the impact of immigration on several economic and social indicators of host countries. The effect of immigration on innovation and technical change is, however, not much studied. The existing work on the effect of immigrants on innovation is generally limited to the role played by highly educated immigrants, generally immigrants with at least tertiary education, and is mostly focused on the US. Yet, although in anglosaxon countries skilled immigration is a sizeable phenomenon -- according to the Docquier and Marfouk (2006) data the percentages of tertiary educated immigrants were in 2001 40.3% for Australia, 58.8% for Canada, 34.9% for the UK, ad 42.7% for the US -- this is much less the case in European countries, for which just the minority of immigrants are skilled. Just to take a few figures, according to the same source, the percentages of tertiary-educated immigrants were 16.4% for France, 21.8% for Germany, 15.4% for Italy and 18.5% for Spain. Now, although the existing literature has emphasized why there are good reasons to expect positive effects of skilled immigrants on the innovation of the receiving countries, it has much less to say about the general effect of immigrants, or of low-educated immigrants. In this paper, we make an attempt to partly fill the gap concerning the effects of overall immigration on innovation, and in particular of low-skilled immigrants, existing in the literature. In addition to providing evidence for a country which was exposed to a very fast and large wave of immigration during the 2000s -- Italy --, and for which evidence is scant, we also use a very small geographical scale of analysis -- Italian provinces corresponding to NUTS-3 regions --, which presumably enables us to better control for differences in institutional and socio-economic factors which are difficult to observe but which may simultaneously contribute to both attracting new immigrants and to increasing the innovation potential of a region. More importantly, unlike most papers in the literature which only investigated the effect of skilled immigration, (i) we first focus on the general impact of immigration on innovation, and then (ii) separately look at the effects of low-educated and high-educated immigrants on innovation. Last but not least, we tackle potential endogeneity issues by using a well established instrumental variables (IVs, hereafter) strategy based on immigrants' enclaves.
    Keywords: Immigration;Innovation; Patent applications;Regions; Italy
    JEL: J2
    Date: 2014–11
  18. By: SCHOLZ, Eva-Maria (Université catholique de Louvain, CORE, Belgium)
    Abstract: We analyse the problem of a non-producing patentee who licenses an essential process innovation to a vertical Cournot oligopoly. The vertical oligopoly is composed of an upstream and a downstream sector which may differ in their efficiency or, in other words, in the benefit they derive from the innovation. In this framework we characterise the optimal licensing contract in terms of the licensing revenue maximising policy (fixed-fee or per-unit royalty) and sector (upstream and/or downstream sector). First, it is shown that under a fixed-fee contract licensing to the less efficient industry sector may be the patentee’s licensing revenue maximising strategy. Here, licensing to a less efficient downstream market is all the time optimal in terms of consumer surplus and aggregate economic welfare. Conversely, licensing to a less or equally efficient upstream industry is potentially inefficient. Second, our findings reveal that the optimal licensing policy is sector dependent. A per-unit royalty contract may dominate a fixed-fee policy on the downstream market in terms of licensing revenues, while offering a per-unit royalty contract to the upstream industry is never optimal. As a third and final point we address the case of licensing to both industry sectors. Here we also identify conditions under which two-sector licensing of both sectors is less profitable than one-sector licensing of a single industry (and vice versa).
    Keywords: licensing contracts, fixed-fee, royalties, vertical Cournot oligopoly
    JEL: D43 L13 O31 O34
    Date: 2014–06–11
  19. By: Chronopoulos, Michail (Dept. of Business and Management Science, Norwegian School of Economics); Siddiqui, Afzal (Department of Statistical Science, University College London)
    Abstract: We determine the optimal timing for replacement of an emerging technology facing uncertainty in both the output price and the arrival of new versions. Via a sequential investment framework, we determine the value of the investment opportunity, the value of the project, and the optimal investment rule under three different strategies: compulsive, laggard, and leapfrog. In the first one, we assume that a firm invests sequentially in every version that becomes available, whereas in the second and third ones, it can choose an older or a newer version, respectively. We show that, under a compulsive strategy, technological uncertainty has a non–monotonic impact on the optimal investment decision. In fact, uncertainty regarding the availability of future versions may actually hasten investment in the current one. Next, by comparing the relative values of the three strategies under different rates of technological innovation, we find that, under a low output price, the compulsive strategy always dominates, whereas, at a high output price, the incentive to wait for a new version and adopt either a leapfrog or a laggard strategy increases as the rate of innovation increases, while high price uncertainty mitigates this effect.
    Keywords: Investment analysis; real options; emerging technologies
    JEL: G11 O33
    Date: 2014–06–18
  20. By: Koster, H.R. (Tilburg University, School of Economics and Management)
    Abstract: The growing concern for organizations’ social responsibility and sustainable behavior has been accompanied by considerable awareness of how organizations manage their supply chains. For many organizations, a large proportion of their sustainability impact comes from their inbound supply chain, an area that is addressed by Sustainable Supply Management (SSM). SSM aims to integrate the triple bottom line of environmental, social and economic elements in supply management processes. Advances in SSM have mainly been realized through self-regulation, which refers to the commitment of organizations to control their own conduct beyond what is required by law. The merits and effectiveness of self-regulation are the subject of debate, since a potential downside of self-regulation is that too much freedom can tempt firms to opportunistically choose to change as little as possible. This dissertation consists of three different studies, each of which aims to provide deeper insights into the mechanisms that operate between SSM self-regulation and the incorporation of sustainability in supply management processes. Drawing on research on, among others, dynamic capabilities, management innovation and institutional theory, these studies represent a further contribution to the existing SSM knowledge base.
    Date: 2014
  21. By: Dolata, Ulrich
    Abstract: In diesem Aufsatz, der auf einer systematischen Auswertung von Geschäftsberichten, Dokumenten, verfügbarem empirischem Material, Literatur und Presseberichten basiert, werden die Konzentrationsprozesse auf den wesentlichen Internetmärkten sowie die Expansions- und Innovationsstrategien der fünf führenden Konzerne Google, Facebook, Apple, Amazon und Microsoft analysiert. Die Befunde, die der Text vorstellt, sind von einer Dezentralisierung der Markt- und Demokratisierung der Innovationsprozesse im Web ebenso weit entfernt wie von Vorstellungen einer vornehmlich offenen und kollaborativ betriebenen Technik- und Produktentwicklung. Die fünf untersuchten Konzerne prägen nicht nur wesentliche Angebote und Märkte des Internets. Sie regeln als Betreiber der zentralen Infrastrukturen auch die Zugänge zum Netz, strukturieren die Kommunikationsmöglichkeiten der Nutzer und sind wesentliche Treiber des Innovationsprozesses. Nicht Dezentralisierung, Demokratisierung und Kooperation, sondern Konzentration, Kontrolle und Macht sind, so die These, die Schlüsselprozesse und -kategorien, mit denen sich die wesentlichen Entwicklungstendenzen des (kommerziellen) Internets angemessen erfassen lassen.
    Abstract: Based on a systematic review and evaluation of business reports, documents, statistics, literature and press releases, this paper analyzes the market concentration and the expansion and innovation strategies of the five leading internet corporations Google, Facebook, Apple, Amazon and Microsoft. The findings invalidate any claims that a decentralization of the market and a democratization of the Internet is taking place, or that research, development and innovation processes are becoming more open and collaborative. The five examined corporations, as the operators of the core infrastructures of the worldwide web, shape the overall products and services offer of the Internet, determine access to the web, structure the communication possibilities for users, and are the main drivers of innovation in this field. Not decentralization, democratization and open innovation, but market concentration, control and power struggles are categories to adequately describe the fundamental dynamics of the Internet.
    Date: 2014
  22. By: Simplice Anutechia Asongu (Association of African Young Economists); Antonio Andrés (Universidad Camilo Jose CelaFacultad)
    Abstract: In this paper, we examine global trajectories, dynamics, and tendencies of software piracy to ease the benchmarking of current efforts towards harmonizing the standards and enforcements of Intellectual Property Rights (henceforth IPRs) protection worldwide. Our empirical exercise is based on 15 different panel regressions, which together consists of 99 countries. The richness of the dataset allows us to disaggregate countries into fundamental characteristics of business software piracy based on income-levels (high-income, lower-middle-income, upper-middle-income and low-income), legal-origins (English common-law, French civil-law, German civil-law and, Scandinavian civil-law) and, regional proximity (South Asia, Europe & Central Asia, East Asia & the Pacific, Middle East & North Africa, Latin America & the Caribbean and, Sub-Saharan Africa). Our main finding suggest that, a genuine timeframe for standardizing IPRs laws in the fight against software piracy is most feasible within a horizon of 4.3 to 10.4 years. In other words, full (100%) convergence within the specified timeframe will mean the enforcements of IPRs regimes without distinction of nationality or locality within identified fundamental characteristics of software piracy. The absence of convergence (in absolute and conditional terms) for the World panel indicates that, blanket policies may not be effective unless they are contingent on the prevailing trajectories, dynamics and tendencies of software piracy. Policy implications and caveats are also discussed.
    Keywords: Piracy, Business Software, Software piracy, Intellectual Property Rights, Panel data, Convergence
    JEL: F42 K42 O34 O38 O57
    Date: 2014–10
  23. By: Reinhold Kosfeld; Mirko Titze
    Abstract: Strong regional clusters are increasingly seen as a response to economic globalization by policy makers and regional development agencies. The reasoning of competitive advantages of countries and regions with enterprises organized in clusters has mainly been popularized by Porter (1990, 1998, 2000). As well-working clusters are associated with high productivity growth and innovation potential, the cluster approach has become appealing in different fields of economic policy. In particular cluster-based instruments are in integral part of EU regional policy (Christensen et al., 2011). In most EU countries cluster-oriented policy plays an important role at the national and regional level (Oxford Research, 2008). This also holds for Germany where diverse national and regional programmes were set up to promote cluster development (Török, 2012). Although the cluster approach is based on the agglomeration theory, a variety of definitions of a cluster exists (Martin/Sunley, 2003). The present paper aims at improving the strategy of regional cluster identification. First, at the national level, the dominant related sectors of R&D intensive industries are basically discovered by qualitative input-output analysis (QIOA). Yet it has to be allowed for the fact that usually not all enterprises of these sectors belong to the respective value added chains. Thus, QIOA has to be supplemented by quantitative input-output analysis in order to avoid distortion effects that arise from defining too heterogeneous clusters. Here downstream and upstream sectors are considered according to their involvement in the production activities of the key industry. Secondly, at the local level, it has to be settled whether and how spatial externalities and spillovers should be allowed for in locating regional clusters. Most applied cluster studies ignore the presence of spatial interaction between interrelated geographical units. If geographical units are considered to be spatially independent in the presence of spillover, however, spatial clustering tends to be underestimated (Guillain/Le Gallo, 2007). Feser/Koo/Renski/Sweeney (2001) and Feser/Sweeney (2002) were the first to explicitly accounting for spatial interaction between regions in an applied cluster study for the US state of Kentucky. In a follow-up study, Feser/Sweeney/Renski (2005) extended spatial analysis to the United States as a whole. Both studies make use of the Getis-Ord statistic to measure and test for local spatial clustering (Ord/Getis, 1995). Recently, Pires et al. (2013) utilize the local Moran test for localizing industrial clusters in Brazil. A major drawbacks of both local methods is the necessity of fixing the environments of the regions in advance. reach of the geographical extent of potential spillover effects in advance. To allow for varying reaches of the geographical extent of regional interaction, here the flexible approach of spatial scanning is adopted (Kulldorff, 1997). On the basis of Kulldorff's scan test, the variable extent of potential regional clusters is accurately captured.
    Keywords: National cluster templates; regional clusters; Qualitative Input-Output Analysis (QIOA); spatial scanning
    JEL: R12 R15
    Date: 2014–11
  24. By: Liu, Haiyang
    Abstract: This paper presents a growth model with decreasing returns of intra-industry research and development. With the old industries fade away, more and more researchers come out to create new industries. This means growth can keep constant, stagnancy can breed prosperity, and it can also explain business cycle, structural change, the rise and fall of national economy, and the importance of freedom market which allowing abound trial and error to seek new growth engine.
    Keywords: Economic Growth, Decreasing Return, Research and Development
    JEL: E32 O4
    Date: 2014–01–03

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