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on Microeconomics |
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Issue of 2007‒08‒27
nineteen papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | JEON, Doh-Shin; ROCHET, Jean-Charles |
| JEL: | D42 L42 L82 |
| Date: | 2007–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7208&r=mic |
| By: | Anette Boom (Copenhagen Business School); Stefan Buehler (University of Zurich) |
| Abstract: | We examine the effects of restructuring electricity markets on capacity investments, retail prices and welfare when demand is uncertain. We study the following market configurations: (i) integrated monopoly, (ii) integrated duopoly with wholesale trade, and (iii) separated duopoly with wholesale trade. Assuming that wholesale prices can react to changes in retail prices (but not vice versa), we find that generators install sufficient capacity to serve retail demand in each market configuration, thus avoiding blackouts. Furthermore, aggregate capacity levels and retail prices are such that the separated (integrated) duopoly with wholesale trade performs best (worst) in terms of welfare. |
| Keywords: | electricity; investments; generating capacities; vertical integration; monopoly and competition |
| JEL: | D42 D43 D44 L11 L12 L13 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuieci:2007-09&r=mic |
| By: | Wang Xun; Luo Ting |
| Abstract: | Before serving a new market, a multinational enterprise (MNE) has several entry strategies, which include foreign direct investment (FDI), joint venture (JV) and exclusive licensing (EL). Entry cost, market size of the host country, and the discount rate are the main determinants when the MNE chooses its optimal entry strategy. At a certain level of ownership share that the MNE holds, JV will generate the highest social welfare. If firms can choose between competition and collusion, at different levels of the discount rate under FDI and EL, collusive and cheating behavior will happen. |
| Keywords: | Entry strategies, Multinational enterprise, Welfare, Collusion, Cheating |
| JEL: | D21 F23 I31 L11 L13 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c012_046&r=mic |
| By: | IVALDI, Marc; VIBES, Catherine |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7201&r=mic |
| By: | Andrea Fosfuri (Universidad Carlos III de Madrid); Thomas Rønde (Department of Economics, University of Copenhagen) |
| Abstract: | We study a situation in which an R&D department promotes the introduction of an innovation that results in costly re-adjustments for a production department. In response, the production department tries to resist change by improving the existing technology. We show that firms balancing the strengths of the two departments perform better. As a negative effect, resistance to change might distort the R&D department’s effort away from radical innovations. The firm can solve this problem by implementing the so-called skunk works model of innovation where the R&D department is isolated from the rest of the organization. Several implications for managing resistance to change and for the optimal design of R&D activities are derived. |
| Keywords: | resistance to change; innovation; skunk works model; contest |
| JEL: | L2 M12 M54 O31 O32 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuieci:2007-10&r=mic |
| By: | Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper focuses on how characteristics of regions pertaining to local information about product varieties and markets as well as networks for the transmission of information about innovation opportunities influence the arrival of innovation ideas to existing and potential entrepreneurs. We formulate a model where entrepreneurs or innovating firms introduce new products in a quasi-temporal setting. Market conditions are characterized by monopolistic competition between varieties belonging to the same product group, in which there is entry and exit of varieties. Firms innovate in response to the arrival of innovation ideas. To realize these ideas firms have to make an R&D investment and a firm’s decision to export a variety to a new market is associated with a market channel investment. The theoretical model is used as a reference when formulating two regression models, with which we estimate factors that can explain the introduction of new export varieties by firms in different regional milieus. In one model we examine the emergence of new export firms, and in the second model we investigate the appearance of new export varieties. Results are consistent with the assumption that knowledge and information flows have a positive influence on the frequency of arrival of innovation ideas to firms. |
| Keywords: | innovation ideas; exports; entrepreneurship; location; knowledge spillovers |
| JEL: | O31 R11 R12 |
| Date: | 2007–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0095&r=mic |
| By: | Lederman, Daniel |
| Abstract: | A model of firm innovation illustrates the effects of the threat of imitation and product varieties on a representative firm ' s decision to invest in research and development to produce new product varieties. The model motivates two empirical questions: (1) Is research and developm ent partially correlated with firms ' propensity to introduce new products or product innovation in developing countries? (2) Do trade policies and the national investment climate affect firms ' propensity for product innovation? The econometric evidence suggests that the answers are yes and yes, but the investment climate affects product innovation in a manner that is consistent with the presence of market failures and state capture. National trade-policy distortions appear to reduce the probability of product innovation, and the density of exporting firms at the national level also seems to positively affect the propensity to introduce new products by individual firms. The paper discusses some policy implications. |
| Keywords: | E-Business,Innovation,Microfinance,Inequality,Economic Theory & Research |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4319&r=mic |
| By: | DE VILLEMEUR, Etienne; GUI, Benedetto |
| JEL: | D42 D62 H21 H23 L51 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7307&r=mic |
| By: | GOLLIER, Christian |
| Date: | 2007–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7278&r=mic |
| By: | Andrew Atkeson; Ariel Burstein |
| Abstract: | We present a general equilibrium model of the decisions of firms to innovate and to engage in international trade. We use the model to analyze the impact of a reduction in international trade costs on firms' process and product innovative activity. We first show analytically that if all firms export with equal intensity, then a reduction in international trade costs has no impact at all, in steady-state, on firms' investments in process innovation. We then show that if only a subset of firms export, a decline in marginal trade costs raises process innovation in exporting firms relative to that of non-exporting firms. This reallocation of process innovation reinforces existing patterns of comparative advantage, and leads to an amplified response of trade volumes and output over time. In a quantitative version of the model, we show that the increase in process innovation is largely offset by a decline in product innovation. We find that, even if process innovation is very elastic and leads to a large dynamic response of trade, output, consumption, and the firm size distribution, the dynamic welfare gains are very similar to those in a model with inelastic process innovation. |
| JEL: | F1 L11 L16 O3 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13326&r=mic |
| By: | Littlechild, S. |
| Abstract: | Ohio allows communities to vote to aggregate the loads of individual consumers (unless they opt out) in order to seek a competitive energy supplier. Over 200 communities have voted to do this for electricity. By 2004 residential switching reached 69% in Cleveland territory (95% from municipal aggregation) but by 2006 had fallen to 8%. Savings are now small, but customer acquisition costs are low and the cost to consumers is negligible. Aggregation and retail competition have been thwarted by Rate Stabilization Plans holding incumbent utility prices below cost since 2006. In the Ohio gas sector, rate regulation has not discouraged aggregation and competition, but market prices falling below municipally negotiated rates can be politically embarrassing. How municipal aggregation would fare against individual choice in a market conducive to retail competition is an open question, but the policy deserves consideration elsewhere. Key words: Municipal aggregation, retail competition, electricity, gas, Ohio, regulation. |
| JEL: | L33 L43 L51 L94 L98 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0739&r=mic |
| By: | BERGANTINO, Angela Stefania; DE VILLEMEUR, Etienne; VINELLA, Annalisa |
| JEL: | L11 L13 L51 L9 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:6379&r=mic |
| By: | TIROLE, Jean |
| JEL: | D23 D82 L22 D86 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7039&r=mic |
| By: | Tseveen Gantumur; Andreas Stephan |
| Abstract: | In response to global market forces such as deregulation and globalization, technological change and digital convergence, the telecommunications in the 1990s witnessed an enormous worldwide round of Mergers & Acquisitions (M&A). Given both M&A and Innovation a major means of today’s competitive strategy development, this paper examines the innovation determinants of M&A activity and the consequences of M&A transactions on the technological potential and the innovation performance. We examine the telecommunications equipment industry over the period 1988-2002 using a newly constructed data set with firm-level data on M&A and innovation activity as well as financial characteristics. By implementing a counterfactual technique based on a matching propensity score procedure, the analysis not only controls for merger endogeneity and ex-ante observable firms characteristics but also takes account of unobserved heterogeneity. The study provides evidence that M&A realize significantly positive changes to the firm’s post-merger innovation performance. The effects of M&A on innovation performance are in turn driven by both the success in Research and Development (R&D) activity and the deterioration in internal technological capabilities at acquiring firms prior to a merger. |
| Keywords: | Mergers & Acquisitions, Innovation Performance, Telecommunications Equipment Industry. |
| JEL: | L63 O30 L10 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2007-051&r=mic |
| By: | Robin Mason; Helen Weeds |
| Abstract: | We assess the impact of merger policy on entry and entrepreneurship. Facing uncertainty about its prospects and foreseeing that it may wish to quit should profitability prove poor, a rational entrant considers possible exit routes. Horizontal merger reduces competition subsequently, lowering welfare in the short run, but also provides a valuable exit route. By facilitating exit and thus raising the value of entry, more lenient merger policy may stimulate entry sufficiently that welfare is increased overall. We calculate the optimal merger policy in the form of a low, but positive, profitability threshold below which a merger is permitted despite its adverse impact on post-merger competition. This may be viewed as an extension of the "failing firm defence" to include ailing, low profitability firms as well as imminently failing ones. The implications of strategic firm behaviour for the optimal policy are examined, and merger policy is compared with an entry subsidy. |
| Date: | 2007–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:634&r=mic |
| By: | Yakov Babichenko |
| Date: | 2007–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:843644000000000369&r=mic |
| By: | Dennis W. Carlton; Joshua S. Gans; Michael Waldman |
| Abstract: | This paper provides a new explanation for tying that is not based on any of the standard explanations -- efficiency, price discrimination, and exclusion. Our analysis shows how a monopolist sometimes has an incentive to tie a complementary good to its monopolized good in order to transfer profits from a rival producer of the complementary product to the monopolist. This occurs even when consumers -- who have the option to use the monopolist's complementary good -- do not use it. The tie is profitable because it alters the subsequent pricing game between the monopolist and the rival in a manner favorable to the monopolist. We show that this form of tying is socially inefficient, but interestingly can arise only when the tie is socially efficient in the absence of the rival producer. We relate this inefficient form of tying to several actual examples and explore its antitrust implications. |
| JEL: | L10 L12 L4 L40 L41 L42 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13339&r=mic |
| By: | Gilles Koléda |
| Abstract: | This paper presents a two-countries dynamic model of Schumpeterian growth with two innovative R&D sectors in each country: a vertical R&D sector that improves the quality of existing differentiated products and a horizontal R&D sector that creates new differentiated products. The two countries exchange differentiated products and beneficiate from knowledge spillovers, possibly from the other country. We opt for an endogenous growth without scale effect specification à la Howitt (1999) and explore the consequence on home research and production of an increase of research capacities in foreign country (possibly impulsed by R&D subsidies). |
| Keywords: | Endogenous growth without scale effect, innovation, Trade, spillovers, R&D subsidies |
| JEL: | F43 O31 O34 O40 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c012_009&r=mic |
| By: | Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | Innovation networking has become both more feasible with improved telecommunication and more important as it usually produces research of higher quality. However, the spatial distribution of academic networks and innovative networks are not uniform. Despite overwhelming evidence on the benefits of collaboration, patent data from 1994-2001 in Sweden demonstrate that innovation networks are not very common. In addition, the pattern of innovative networks is very fragmented. Our results indicate that innovation networks are more likely to exist in densely populated areas with a diversified industry. Face-to-face contacts in such areas seem to promote networking. Moreover, science-oriented industries appear to benefit more from proximity to universities when it comes to collaboration. However, the size of the market does not matter at all when it comes to collaboration, more important is the density and diversity of the market. |
| Keywords: | innovation; networks; patent; collaboration |
| JEL: | N34 O31 R11 |
| Date: | 2007–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0091&r=mic |