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on Microeconomics |
| By: | Rupayan Pal |
| Abstract: | This paper compares equilibrium technology adoption in a differentiated duopoly under two alternative modes of product market competition, Cournot and Bertrand. It shows that the cost of technology has differential impact on technology adoption, that is, on cost-efficiency of the industry, under two alternative modes of product market competition. The possibility of ex post cost asymmetry between firms is higher under Bertrand competition than under Cournot competition. If the cost of technology is high, Bertrand competition leads to higher cost-efficiency than Cournot competition provided that the cost reducing effect of the technology is high. On the other hand, if the technology reduces the marginal cost of production by a very low amount, Cournot competition may lead to higher cost-efficiency than Bertrand competition.[IGIDR WP NO 1] |
| Keywords: | Differentiated duopoly; limit-pricing; price effect; selection effect; technology adoption; cournot; bertrand |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1941&r=mic |
| By: | Astrid Cullmann; Jens Schmidt-Ehmcke; Petra Zloczysti |
| Abstract: | This paper assesses the relative efficiency of knowledge production in the OECD using a nonparametric DEA approach. Resources allocated to R&D are limited and should therefore be used efficiently given the institutional and legal constraints. This paper presents efficiency scores based on an intertemporal frontier estimation for the period 1995 to 2004 and analyzes the impact of the regulatory environment using the single bootstrap procedure suggested by Simar and Wilson (2007). The empirical evidence supports the hypothesis that barriers to entry, aimed at reducing competition, lower research efficiency by attenuating the incentive to innovate and to allocate resources efficiently. |
| Keywords: | R&D efficiency, data envelopment analysis, truncated regression, regulation |
| JEL: | C14 C24 L50 O31 O57 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp883&r=mic |
| By: | Oliver Budzinski (Department of Environmental and Business Economics, University of Southern Denmark); Jürgen-Peter Kretschmer (Economic Policy Unit, Philipps-University of Marburg, Germany) |
| Abstract: | Standard welfare analysis of horizontal mergers usually refers to two effects: the anticompetitive market power effect reduces welfare by enabling firms to charge prices above marginal costs, whereas the procompetitive efficiency ef-fect increases welfare by reducing the costs of production (synergies). How-ever, demand-side effects of synergies are usually neglected. We introduce them into a standard oligopoly model of horizontal merger by assuming an (empirically supported) decrease in labour demand due to merger-specific synergies and derive welfare effects. We find that efficiency benefits from horizontal mergers are substantially decreased, if involuntary unemployment exists. However, in full employment economies, demand-side effects remain negligible. Eventually, policy conclusions for merger control are discussed. |
| Keywords: | Horizontal mergers, involuntary unemployment, efficiency defense, oligopoly, competition |
| JEL: | L13 L41 J01 L16 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:90&r=mic |
| By: | Jonathan Vogel |
| Abstract: | In this paper we present and solve a three-stage game of entry, location, and pricing in a spatial price discrimination framework with arbitrarily many heterogeneous firms. We provide a unique characterization of all pure undominated strategy SPNE without imposing restrictions on the distribution of marginal costs or the allocation of transportation costs between firms and consumers. |
| JEL: | L13 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14978&r=mic |
| By: | Böhme, Enrico; Müller, Christopher |
| Abstract: | This paper investigates whether a price-concentration relationship can be found on local cinema markets in Germany. First, we test a model of monopolistic pricing using a new set of German micro data and find no significant difference in admission prices on monopoly and oligopoly markets. In a next step, we test whether this can be explained by the existence of local monopolies, but find no hint of that. Implicit or explicit collusion among cinema operators might explain our observations. |
| Keywords: | price-concentration study; cinema pricing |
| JEL: | L82 L11 R32 |
| Date: | 2009–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15315&r=mic |
| By: | Valentina Bosetti (Fondazione Eni Enrico Mattei and CMCC); Carlo Carraro (FEEM, University of Venice, CEPR, CESIFO and CMCC); Romain Duval (OECD, Economics Department); Alessandra Sgobbi (Fondazione Eni Enrico Mattei and CMCC); Massimo Tavoni (Fondazione Eni Enrico Mattei and CMCC) |
| Abstract: | This paper uses the WITCH model, a computable general equilibrium model with endogenous technological change, to explore the impact of various climate policies on energy technology choices and the costs of stabilising greenhouse gas concentrations. Current and future expected carbon prices appear to have powerful effects on R&D spending and clean technology diffusion. Their impact on stabilisation costs depends on the nature of R&D: R&D targeted at incremental energy efficiency improvements has only limited effects, but R&D focused on the emergence of major new low-carbon technologies could lower costs drastically if successful – especially in the non-electricity sector, where such low-carbon options are scarce today. With emissions coming from multiple sources, keeping a wide range of options available matters for stabilisation costs more than improving specific technologies. Due to international knowledge spillovers, stabilisation costs could be further reduced through a complementary, global R&D policy. However, a strong price signal is always required. |
| Keywords: | Climate policy; Energy R&D; Fund; Stabilisation costs |
| JEL: | H0 H2 H3 H4 O3 Q32 Q43 Q54 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.14&r=mic |
| By: | Berg Anita H.J. van den; Herings P. Jean-Jacques; Peters Hans J.M. (METEOR) |
| Abstract: | We analyze strategic firm behavior in settings where the production stage is followed by several periods during which only sales take place. We analyze the dynamics of the market structure, the development of prices and sales over time, and the implications for profits and consumer surplus. Two specific settings are analyzed. In the first, a firm can commit up-front to a sales strategy that does not depend on the actual sales of its competitor. In this case there is a unique Nash equilibrium and price increases over time. In the second setting,there is no commitment and firms can adjust their sales in response to observed supply of their competitor in the previous period. It is shown that in this case a subgame perfect Nash equilibrium does not always exist. Equilibria can have surprising features. For some parameter constellations, price may decrease over time. It is also possible that the firm increases its pro t by destroying some of its production. When firms have equal size, the equilibrium outcome is the same in both the commitment and the non-commitment setting. In general, the setting without commitment is bene cial to the larger firm, whereas the setting with commitment leads to higher pro ts for the smaller firm. |
| Keywords: | mathematical economics; |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2009020&r=mic |
| By: | Sebastian Braun |
| Abstract: | This paper studies how different unionisation structures affect firm productivity, firm performance, and consumer welfare in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among hetero- geneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From a welfare perspective, the choice between centralised and decentralised bar- gaining involves a potential trade-off between product variety and product prices. Extending the model to a two-country setup, I furthermore show that the positive effect of centralised bargaining on average productivity can be overturned when firms face international low-wage competition. |
| Keywords: | Trade Unions, Productivity, Firm Performance, International Competition |
| JEL: | J50 D43 F16 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2009-027&r=mic |
| By: | Hiroshi Kitamura (Graduate School of Economics, Osaka University) |
| Abstract: | This paper analyzes the market diffusion of a new product whose quality is uncertain. Consumers learn the product quality by observing the history of market outcomes. Firms cannot observe how consumers evaluate the product quality and learn it in response to consumerfs behavior. As a result of informational externalities, new entry occurs gradually. This dual uncertainty contributes to S-shaped diffusion of the new product with strictly declining prices. |
| Keywords: | experience goods; quality uncertainty; bilateral learning; S-shaped diffusion. |
| JEL: | D11 L11 L14 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0913&r=mic |
| By: | Sunil Kanwar |
| Abstract: | This paper investigates whether, in what direction, and to what extent one mode of technology transfer – namely, overseas R&D – is influenced by the strength of intellectual property protection that host nations provide. Using data spanning the period 1977-2004, we find weak support at best for the claim that strengthening intellectual property rights will have a significant positive influence on the magnitude of overseas R&D investment by (US) multinationals. This result is found to be robust to dis-aggregation of both the measure of intellectual property protection into its component indices, as well as to dis-aggregation of overseas R&D into industry-specific magnitudes. Instead, the host country market size and availability of local human capital resources are found to be the consistently important explanatory variables. [CDE DSE WP NO 166] |
| Keywords: | intellectual property; technology transfer; overseas r&d; estimation model |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1948&r=mic |
| By: | Uwe Cantner (Friedrich Schiller University Jena, Chair of Economics / Microeconomics); Kristin Joel (Friedrich Schiller University Jena, Chair of Economics / Microeconomics); Tobias Schmidt (Deutsche Bundesbank, Economic Research Centre) |
| Abstract: | The aim of this paper is to analyse the effects of knowledge management on the innovation success of firms in Germany. Using a matching procedure on data from the German Innovation Survey of 2003 ("Mannheim Innovation Panel"), we pair firms applying knowledge management with twin firms with similar characteristics not applying knowledge management. Our focus is on investigating the effects of knowledge management techniques on the economic success of firms with product and process innovations. The results of our matching analysis reveal that firms which apply knowledge management perform better in terms of higher-than-average shares of turnover with innovative products compared to their twins. We do not find a significant effect of knowledge management on the share of cost reductions with process innovation. |
| Keywords: | knowledge management, innovation, matching estimator |
| JEL: | O32 L23 L25 M11 |
| Date: | 2009–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-037&r=mic |
| By: | Cristiano Antonelli; Morris Teubal |
| Abstract: | This paper explores the new market-mediating mechanisms linking SU invention on the one hand and economic growth on the other. Two such mechanisms come to our mind under venture capitalism (of which venture capitalism is directly involved only in the first): 1) a systemic rather than haphazard link between radical inventions and the emergence of new product markets; and 2) a link between new product markets) on the one hand and invention & unbundled technology markets on the other. The first highlights not only the volatility and precariousness of the R&D companies which operated prior to venture capitalism, but also, and related to this, the weak links that existed then between radical invention and the emergence of new markets. There are two aspects of 2) above: 2a) derived demand for improvements in the product and process technology underlying a market (and industry); and 2b) a demand for a substitute, disruptive technology which could replace the existing one. In both cases market size signals the ‘benefits’ to be derived from improving or substituting the underlying technology. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:icr:wpicer:03-2009&r=mic |
| By: | Paul Grootendorst |
| Abstract: | The question as to how society should support pharmaceutical (‘pharma’) innovation is both pertinent and timely: Pharma drugs are an integral component of modern health care and hold the promise to treat more effectively various debilitating health problems. The rate of pharma innovation, however, has declined since the 1980s. Many observers question whether the patent system is capable of providing the appropriate incentives for pharma innovation and point to several promising alternative mechanisms. These mechanisms include both ‘push’ programs – subsidies directed towards the cost of pharma R&D – and ‘pull’ programs – lumpsum rewards for the outputs of pharma R&D, that is, new drugs. I review evidence why our current system of pharma patents is defective and outline the various alternative mechanisms that may spur pharma innovation more effectively. |
| Keywords: | Pharmaceuticals, R&D, patents, prizes, innovation |
| JEL: | I18 O34 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:246&r=mic |
| By: | HOSONO Kaoru; TAKIZAWA Miho; TSURU Kotaro |
| Abstract: | We investigate the impact of merger on innovation and efficiency using a micro dataset of Japanese manufacturing firms including unlisted firms during the period of 1995-1999. We find that the acquirer's total factor productivity (TFP) decreases immediately after mergers and does not significantly recover to the pre-merger level within three years after mergers. We also find that the R&D intensity does not significantly change after mergers in spite of a significant increase in the debt-to-asset ratio. Our results suggest that the costs of business integration are large and persistent. To take into considering large integration costs, we also analyze the post-merger performance from one year after mergers, finding no significant increase in TFP or R&D intensity up to three years after mergers. Given the heterogeneity of mergers, we analyze the post-merger performance by classifying merger types. We find that the recovery of TFP after mergers is significant for mergers across industries or within the same business group, suggesting that a synergy effect works well and integration costs are small for those types of mergers. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:09017&r=mic |
| By: | Gumbau-Albert, Mercedes; Maudos, Joaquin |
| Abstract: | This paper analyses the importance of different technological inputs (R&D and human capital) and different spillovers in explaining the differences in patenting among Spanish regions in the period 1986-2003. The analysis is based on the estimation of a knowledge production function. A region’s own R&D activities and human capital are observed to have a positive significant effect on innovation output, measured by the number of patents. R&D spillovers weighted by the distance and the volume of trade flows between regions cause positive effects on a region’s patents. However, distance matters more than the intensity of trade flows and the R&D spillover effects between regions are bounded: spillovers from closer regions perform better than spillovers from distant regions. On the opposite side, human capital spillovers do not cause any effect outside the region itself. |
| Keywords: | patents; R&D; human capital; spillovers |
| JEL: | O18 O31 R11 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15260&r=mic |
| By: | Tuomas Takalo |
| Abstract: | ABSTRACT : Economic interest in innovation policy largely arises from the fundamental importance of innovation to social welfare and from well-known inefficiencies in innovation in a competitive market environment. As a result, a wide variety of public innovation policies are used in practice. This report reviews the economic justifications for public innovation policies and compares the existing policy tools, paying particular attention to the Finnish innovation policy environment. |
| Date: | 2009–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1185&r=mic |
| By: | Lea Nicita (Fondazione Eni Enrico Mattei); Carlo Carraro (University of Venice, Fondazione Eni Enrico Mattei, CEPR, CEPS, CESifo and CMCC); Emanuele Massetti (Fondazione Eni Enrico Mattei) |
| Abstract: | This paper analyses whether and how a climate policy designed to stabilize greenhouse gases in the atmosphere is likely to change the direction and pace of technical progress. The analysis is performed using an upgraded version of WITCH, a dynamic integrated regional model of the world economy. In this version, a non-energy R&D Sector, which enhances the productivity of the capital-labor aggregate, has been added to the energy R&D sector included in the original WITCH model. We find that, as a consequence of climate policy, R&D is re-directed towards energy knowledge. Nonetheless, total R&D investments decrease, due to a more than proportional contraction of non-energy R&D. Indeed, when non-energy and energy inputs are weakly substitutable, the overall contraction of the economic activity associated with a climate policy induces a decline in total R&D investments. However, enhanced investments in energy R&D and in the energy sector are found not to “crowd-out” investments in non-energy R&D. |
| Keywords: | echnical Change, Climate Policy, Stabilization Cost, R&D Investments |
| JEL: | C72 H23 Q25 Q28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.8&r=mic |
| By: | Roderik Ponds; Frank van Oort; Koen Frenken |
| Abstract: | This paper analyses the effect of knowledge spillovers from academic research on regional innovation. Spillovers are localized to the extent that the underlying mechanisms are geographically bounded. However, university-industry collaboration - as one of the carriers of knowledge spillovers - is not limited to the regional scale. Consequently, we expect spillovers to take place over longer distances. The effect of university-industry collaboration networks on knowledge spillovers is modelled using an extended knowledge production function framework applied to regions in the Netherlands. We find that the impact of academic research on regional innovation is mediated not only by geographical proximity but also by social networks stemming from collaboration networks. |
| Keywords: | knowledge production function, knowledge spillovers, university-industry collaboration, innovation, social networks |
| JEL: | C21 O18 O31 R11 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0903&r=mic |
| By: | Fernandez de Guevara, Juan; Maudos, Joaquin |
| Abstract: | This paper analyzes the effect of regional financial development and bank competition on firms’ growth using the Spanish provinces as a testing ground. Our results show that firms in industries with a greater dependence on external finance grow faster in more financially developed provinces. The results also show that bank monopoly power has an inverted-U effect on firms’ growth, suggesting that market power has its highest effect at intermediate values. The effect is heterogeneous among firms according to the financial dependence of the industry they belong to. This result is consistent with the literature on relationship banking which argues that bank competition can have a negative effect on the availability of finance for more informationally opaque firms. |
| Keywords: | economic growth; regional financial development; bank competition |
| JEL: | L11 D40 G21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15256&r=mic |
| By: | Matteo M. Galizzi |
| Abstract: | In the context of international gas markets, we investigate the interaction between price formation and communication networks in a bilateral duopoly with heterogeneous buyers. Given a particular buyers-sellers network graph, prices are formed as the outcome of dynamic decentralized negotiations among traders. We characterize, for any network structure, the full set of sub-game perfect Nash equilibria in pure and stationary strategies (PSSPNE) of the non-cooperative bargaining game with random order of proposals and simultaneous responses. Depending on the inter-temporal discount factor and the dispersion of reservation values across buyers, negotiations may lead, even in a completely connected buyers-sellers network, to multiple equilibria, co-existence of different prices, delays in trade and inefficient allocations. The endogenous bargaining power of each trader as a function of her position in the communication network is derived by comparing traders' payoffs across networks. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ubs:wpaper:0906&r=mic |
| By: | Sophie Massin (Centre d'Economie de la Sorbonne) |
| Abstract: | This article analyzes the behavior of a producer of a legal addictive good (tobacco, alcohol or gambling) facing a demand with social interactions, especially a deterrence effect of heavy use on initiation. We simulate an epidemic model to estimate at what conditions it could be interesting for him to act responsibly, which means to reduce the escalation rate (from light use to heavy use). We draw conclusions in terms of the debate on corporate social responsibility discourse/practice in a neoclassical perspective. |
| Keywords: | Firm behavior, addiction, social interactions, CSR, dynamic simulation. |
| JEL: | D21 M14 M37 I18 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:09018&r=mic |
| By: | Cinzia Alcidi (IUHEID, The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | This paper investigates the effects of equity market integration on the transmission of monetary policy shocks. Based on the assumption that financial market liberalization and integration lead to falling portfolio holding costs, we analyze its effect on a two-country DSGE model with staggered prices and endogenous portfolio choice under incomplete markets. The model predicts that the reaction of stock prices, output and RER becomes muted upon impact and less persistence with falling portfolio holding costs. To test for a similar pattern in the data, we estimate a VAR with rolling coefficients for Australia, which provides a good case study. We identify a monetary policy shock with the sign restriction approach. The impulse responses generated by the data are consistent with the prediction of the model and imply that equity market liberalization seems to weaken the impact of monetary policy, at least on stock prices. |
| Keywords: | Endogenous portfolio, Monetary policy, Financial liberalization, FAVAR |
| JEL: | E52 C32 F21 F36 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp03-2009&r=mic |
| By: | Thomas Brenner; Tom Broekel |
| Abstract: | Measuring the innovation performance of regions or nations has been repeatedly done in the literature. What is missing in the literature is a discussion of what innovation performance of a region means. How do regions or nations contribute really to the innovation output of Þrms? And how can this contribution be investigated in an empirically sound way? We argue that while the literature offers many suggestions, their theoretical foundation is often weak and the under- lying assumptions are rarely discussed. In this paper, we systematize various mechanisms by which spatial units inßuence ÞrmsÕ innovation activities. On the basis of this, common innova- tion performance measures and analyses are discussed and evaluated. It is concluded that there is no general best way of measuring the innovation performance of spatial units. In fact, the most interesting insights can be obtained using a multitude of different approaches at the same time. |
| Keywords: | innovation performance, regional innovativeness, innovation generation, regional innovation system, national innovation system |
| JEL: | R11 O31 R11 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0904&r=mic |