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on Microeconomics |
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Issue of 2008‒05‒31
seven papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Michael Fritsch (Friedrich Schiller University Jena, German Institute for Economic Research (DIW-Berlin), and Max Planck Institute of Economics, Jena, Germany); Martina Kauffeld-Monz (Institute for Urban Science and Structural Policy (IfS Berlin), Germany) |
| Abstract: | We analyze information and knowledge transfer in a sample of 16 German regional innovation networks with almost 300 firms and research organizations involved. The results indicate that strong ties are more beneficial for the exchange of knowledge and information than weak ties. Moreover, our results suggest that broker positions tend to be associated with social returns rather than with private benefits. |
| Keywords: | Regional innovation networks, R+D-collaboration, knowledge exchange, social network analysis, strong ties, knowledge brokers |
| JEL: | D83 D85 L14 O32 |
| Date: | 2008–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-036&r=mic |
| By: | Irina Suleymanova; Christian Wey |
| Abstract: | We analyze market dynamics under Bertrand duopoly competition in industries with network effects and consumer switching costs. Consumers form installed bases, repeatedly buy the products, and differ with respect to their switching costs. Depending on the ratio of switching costs to network effects, our model generates convergence to monopoly as well as market sharing as equilibrium outcomes. Convergence can be monotone or alternating in both scenarios. A critical mass effect, where consumers are trapped into one technology for sure only occurs for intermediate values of switching costs, whereas for large switching costs market sharing is the unique equilibrium and for small switching costs both monopoly and market sharing equilibria emerge. We also analyze stationary and stable equilibria, where we show that a monopoly outcome is almost inevitable, if switching costs or network effects increase over time. Finally, we examine firms' incentives to make their products compatible and to create additional switching costs. |
| Keywords: | Network effects, switching costs, Bertrand competition, market dynamics |
| JEL: | L13 D43 L41 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp796&r=mic |
| By: | Irina Suleymanova; Christian Wey |
| Abstract: | We analyze duopoly Bertrand competition under network effects. We consider both incompatible and compatible products. Our main result is that network effects create a fundamental conflict between the maximization of social welfare and consumer surplus whenever products are incompatible. While consumer surplus is highest in the symmetric equilibrium, social welfare is highest in the asymmetric equilibrium. We also show that both consumer surplus and social welfare are higher in any equilibrium under compatibility when compared with incompatible products. However, .firms never have strict incentives to achieve compatibility. Finally, we show the robustness of our results when products are horizontally differentiated. |
| Keywords: | Bertrand duopoly, network effects, (In-) compatibility, welfare |
| JEL: | D43 L13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp794&r=mic |
| By: | Javier Coronado; Sergi Jiménez Martín; Pedro L. Marín |
| Abstract: | Multimarket rivalry theory predicts that firms engaged in price competition in several markets might find it optimal to redistribute market power from more collusive markets to more competitive instances. Price regulation is shown to affect this relation in a non-monotonic way. Mild or low price regulation may encourage further market power redistribution, whereas stronger price controls change the result to the point of making it irrelevant. We use data from the Pharmaceutical industry for nine OECD countries which are known to place different levels of price controls. We find evidence of the redistribution effect and the interaction with price regulations when considering contacts between chemically equivalent products; however, widening the contact dimension to consider interactions among substitute therapies make the result less transparent. We also find some evidence of the expected interaction between price controls and the redistribution effect driven by the multi-market structure of the industry. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2008-20&r=mic |
| By: | Ganslandt, Mattias; Persson, Lars; Vasconcelos, Helder |
| Abstract: | Many convicted cartels have a leader which is substantially larger than its rivals. In a setting where firms face indivisible costs of collusion, we show that: (i) firms may have an incentive to merge so as to create asymmetric market structures since this enables the merged firm to cover the indivisible cost associated with cartel leadership; and (ii) forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with a higher risk of collusion. Thus, these results have implications for the practice of the current EU and US merger policies. |
| Keywords: | Cartels; Collusion; Cost Asymmetries; Merger Policy; Ring Leader |
| JEL: | D43 L41 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6829&r=mic |
| By: | Ebell, Monique (Department of Economics and Business Studies, Humboldt University of Berlin, and Centre for Economic Performance, London School of Economics and Political Science); Haefke, Christian (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria, and Instituto de Análisis Económico, CSIC) |
| Abstract: | We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual bargaining. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980’s and 1990’s could be directly attributed to product market deregulation. Under a traditional calibration, our results suggest that a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount. Under a small surplus calibration, however, product market deregulation can account for the entire decline in US trend unemployment over the 1980’s and 1990’s.; |
| Keywords: | Product market competition, barriers to entry, wage bargaining |
| JEL: | E24 J63 O00 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:223&r=mic |
| By: | Stefan Bauernschuster (University of Passau); Oliver Falck (Ifo Institute for Economic Research, University of Munich); Stephan Heblich (Max Planck Institute of Economics, Jena) |
| Abstract: | Keeping up with rapid technological change necessitates constant innovation. Successful innovation depends on both incumbent workers’ knowledge, based on experience, and knowledge about the latest technologies, along with the skills needed to implement them. Both of these knowledge-based elements of innovation can be attained through moderate labor force turnover in combination with continuous training. Based on German micro data, we find empirical evidence in support of training leading to innovation within a multivariate regression framework. However, when instrumenting training by the existence of a union’s contract or a works council this impact disappears. |
| Keywords: | Innovation, training, unions, works councils |
| JEL: | J24 L11 O31 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0024&r=mic |