nep-mic New Economics Papers
on Microeconomics
Issue of 2008‒12‒01
ten papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Asymmetric Equilibria and Non-Cooperative Access Pricing in Telecommunications By Behringer, Stefan
  2. Competition Policy Issues in the Consumer Payments Industry By Nicholas Economides
  3. Markets for Information: Of Inefficient Firewalls and Efficient Monopolies By Antonio Cabrales; Piero Gottardi
  4. Competition, Innovation and Distance to Frontier By Bruno Amable; Lilas Demmou; Ivan Ledezma
  5. Learning and Technology Adoptions By Scholz, Sebastian
  6. Endogenous Technical Change, Spillovers, and Market Structure By Behringer, Stefan
  7. Openness and Innovation - Home and Export Demand Effects on Manufacturing Innovation: Panel Data Evidence for Ireland and Switzerland By Martin Woerter; Stephen Roper
  8. Modelling smoothly the joint effect of several advertising media on sales in a homogeneous market By Annamaria Sorato; Bruno Viscolani
  9. Open innovation in SMEs: Trends, motives and management challenges By Jeroen de Jong; Vareska van de Vrande; Wim Vanhaverbeke; Maurice de Rochemont
  10. A Noncooperative Support for Equal Division in Estate Division Problems By Itai Ashlagi; Emin Karagozoglu; Bettina Klaus

  1. By: Behringer, Stefan
    Abstract: This paper looks at competition in the Telecommunications industry with non-linear tariffs and network based price discrimination. Allowing for asymmetric networks and non-cooperatively chosen access prices simultaneously allows to explicitly derive non-reciprocal equilibrium access price choices that are above the efficient level.
    Keywords: Asymmetric Networks; Access Pricing; Interconnection; Competition Policy; Telecommunications.
    JEL: L96 L51 L41 K21 D40
    Date: 2008–11–27
  2. By: Nicholas Economides
    Date: 2008
  3. By: Antonio Cabrales (Universidad Carlos III, Madrid); Piero Gottardi (European University Institute and Ca’ Foscari University of Venice)
    Abstract: In this paper we study, within a formal model, market environments where information is costly to acquire and is of use also to potential competitors. Agents may then sell, or buy, reports - of unverifiable quality - over the information acquired and choose the trades in the market on the basis of what they learnt. We find that, in equilibrium, information is acquired when its costs are not too high and in that case it is also sold, though reports are typically noisy. Also, the market for information tends to be a monopoly, and there is inefficiency given by underinvestment in information acquisition. Regulatory interventions in the form of firewalls, limiting the access to the sale of information to agents uninterested in trading the underlying object, only make the inefficiency worse. Efficiency can be attained with a monopolist selling differentiated information, provided entry is blocked. The above findings hold when information has a prevalent horizontal differentiation component. When the vertical differentiation element is more important firewalls can in fact be beneficial.
    Keywords: Information sale, Cheap talk, Conflicts of interest, Information Acquisition, Firewalls, Market efficiency
    JEL: D83 C72 G14
    Date: 2008
  4. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Lilas Demmou (DGTPE - Direction Générale du Trésor et de la Politique Economique); Ivan Ledezma (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: According to a recent literature, the positive effect of competition is supposed to be growing with the proximity to the technological frontier. Using a variety of indicators, the paper tests the effect of competition and regulation on innovative activity measured by patenting. The sample consists of a panel of 15 industries for 17 OECD countries over the period 1979-2003. Results show no evidence of a positive effect of competition growing with the proximity to the frontier. Two main configurations emerge. First, regulation has a positive effect whatever the distance to the frontier and the magnitude of its impact is higher the closer the industry is to the frontier. Second, the effect of regulation is negative far from the frontier and becomes positive (or non significant) when the technology gap decreases. These results contradict the belief in the innovation-boosting effect of product market deregulation such as taken into account in the Lisbon Strategy.
    Keywords: Innovation, competition, distance to frontier.
    Date: 2008–07
  5. By: Scholz, Sebastian
    Abstract: A government that wants to increase welfare by subsidizing either an industry’s sales or process innovations or both has to account for possible changes of production, when firms can foresee the government’s actions. In an optimal control framework welfare can be increased by subsidizing either an industry’s sales or process innovations. An earlier innovation date increases the price that is charged up to that innovation date, but decreases it afterwards, when process innovation costs depend on the date of innovation. Hence the welfare effect might be negative. This paper will be the first that sets up a framework, which helps to examine the optimal mixture of sales and innovation subsidies, where innovation costs depend on time and learning on cumulative production quantities. The process innovation can be understood as a substitute to learning. In this set up innovation subsidies are more beneficial for the monopolist, sales subsidies for consumers.
    Keywords: Process Innovation; Timing; Learning-by-Doing
    JEL: L11 L51 O30
    Date: 2008–10–31
  6. By: Behringer, Stefan
    Abstract: This paper investigates the effect of spillovers in a model of endogenous technical change resulting from learning or network effects on the existence of a lower bound to market concentration.
    Keywords: Market Structure; Endogenous Technical Change; Learning; Spillovers; Research and Development
    JEL: O32 D4 L1
    Date: 2008–01–14
  7. By: Martin Woerter (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Stephen Roper (Centre for Small and Medium Enterprises, Warwick Business School, University of Warwick, Coventry, UK)
    Abstract: Recent studies in the tradition of Schmookler have re-emphasised the potential role of demand in stimulating innovation. Here, we reconsider the role of ‘home’ and ‘export’ market demand in stimulating manufacturing innovation using comparable panel data for two small open economies – Ireland and Switzerland. Our analysis is based on the estimation of reduced form innovation production functions using panel data estimators over the sample period 1994 to 2005. For a range of innovation indicators, however, we find little evidence of any significant market demand effects, with innovation performance instead determined largely by firm-level capability effects and characteristics. In policy and strategy terms this suggests the continued value of measures to improve innovation capability regardless of market demand conditions. In more methodological terms our results suggest the validity of the usual assumption implicit in modelling innovation outputs that supply-side factors predominate.
    Keywords: Innovation, demand, Ireland, Switzerland
    JEL: O3 O5 P5
    Date: 2008–11
  8. By: Annamaria Sorato (Department of Applied Mathematics, University of Venice); Bruno Viscolani (Department of Pure and Applied Mathematics, University of Padua)
    Abstract: Decision on the use of different advertising media is a critical issue in marketing. Drawing on some literature related to the dynamic Nerlove-Arrow model, we propose a nonlinear programming framework for discussing how different advertising media may jointly affect the demand for a good. Starting from the idea that different advertising efforts may not simply add (linearly) to produce the demand result, we examine a few special media combination mechanisms which can be represented by smooth functions.
    Keywords: Marketing, Advertising, Production, Nonlinear programming
    JEL: M37 M31 C61
    Date: 2008–11
  9. By: Jeroen de Jong; Vareska van de Vrande; Wim Vanhaverbeke; Maurice de Rochemont
    Abstract: Although evidence for open innovation practices has been provided for large MNEs, they have not yet been analyzed systematically for SMEs. This paper presents the results of a survey among 605 Dutch innovating SMEs. The results show that SMEs are increasingly adapting open innovation practices. Moreover, they indicate a difference in the adaption to open innovation between manufacturing and services firms, and between larger and smaller SMEs. Larger SMEs adapting more quickly and in a more structured and professionalized way to open innovation than smaller ones. The survey furthermore shows that SMEs generally pursue an open innovation strategy to realize market-related objectives such as meeting customer demands, or keeping up with competitors. In addition, the results show that the most important barriers respondents face are related to the organizational and cultural differences when cooperating with other partners. Other serious barriers are administrative burdens, financing and knowledge transfer problems.
    Date: 2008–11–17
  10. By: Itai Ashlagi (Harvard Business School, Negotiation, Organizations & Markets Unit); Emin Karagozoglu (Department of Economics, Maastricht University); Bettina Klaus (Harvard Business School, Negotiation, Organizations & Markets Unit)
    Abstract: We consider estate division problems, a generalization of bankruptcy problems. We show that in a direct revelation claim game, if the underlying division rule satisfies efficiency, equal treatment of equals, and weak order preservation, then all (pure strategy) Nash equilibria induce equal division. Next, we consider division rules satisfying efficiency, equal treatment of equals, and claims monotonicity. For claim games with at most three agents, again all Nash equilibria induce equal division. Surprisingly, this result does not extend to claim games with more than three agents. However, if nonbossiness is added, then equal division is restored.
    Keywords: Bankruptcy/estate division problems, claims monotonicity, direct revelation claim game, equal division, equal treatment of equals, Nash equilibria, nonbossiness, (weak) order preservation.
    JEL: C72 D63 D71
    Date: 2008–11

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