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on Microeconomics |
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Issue of 2009‒05‒30
twelve papers chosen by Joao Carlos Correia Leitao Technical University of Lisbon |
| By: | Luo, Guo Ying |
| Abstract: | This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of profits; firms' outputs are randomly determined rather than generated from profit maximization problems; and firms exit the industry if their wealth is negative. It shows that without purposive profit maximization assumption, monopolistic competition still evolves in the long run. The only long run survivors are those that possess the most efficient technology, face the most favorable market conditions and produce at their profit maximizing outputs. This paper modifies and supports the classic argument for the derivation of monopolistic competition. |
| Keywords: | Evolution; Natural Selection; Irrationality; Monopolistic Competition; Survival of the Fittest; Market Rationality |
| JEL: | D21 L11 D43 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15357&r=mic |
| By: | de Mel, Suresh; McKenzie, David; Woodruff, Christopher |
| Abstract: | Innovation is key to technology adoption and creation, and to explaining the vast differences in productivity across and within countries. Despite the central role of the entrepreneur in the innovation process, data limitations have restricted standard analysis of the determinants of innovation to consideration of the role of firm characteristics. The authors develop a model of innovation that incorporates the role of both owner and firm characteristics, and use this to determine how product, process, marketing, and organizational innovations should vary with firm size and competition. They then use a new, large, representative survey from Sri Lanka to test this model and to examine whether and how owner characteristics matter for innovation. The survey also allows analysis of the incidence of innovation in micro and small firms, which have traditionally been overlooked in the study of innovation, despite these firms comprising the majority of firms in developing countries. The analysis finds that more than one-quarter of the microenterprises are engaging in innovation, with marketing innovations the most common. As predicted by the model, firm size has a stronger positive effect, and competition a stronger negative effect, on process and organizational innovations than on product innovations. Owner ability, personality traits, and ethnicity have a significant and substantial impact on the likelihood of a firm innovating, confirming the importance of the entrepreneur in the innovation process. |
| Keywords: | E-Business,Education for Development (superceded),Innovation,Labor Policies,Microfinance |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4934&r=mic |
| By: | Guido Cozzi; Silvia Galli |
| Abstract: | What is the most innovation-enhancing level of patent protection for the new ideas generated within the framework of multi-stage sequential innovation? How does increasing early innovation appropriability affect basic research, applied research, education, and wage inequality? What does the common law system imply on the macroeconomic responses to institutional change? We show how the jurisprudential changes in intellectual property rights witnessed in the US after 1980 can be related to the well-known increase in wage inequality and in education attainments. A Schumpeterian general equilibrium approach is followed. |
| Keywords: | Basic and Applied R&D, Sequential Innovation, Skill Premium, Inequality and Education, Research Exemption, Common Law |
| JEL: | O31 O33 O34 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2009_20&r=mic |
| By: | Juan Luís Jiménez (Departamento de Análisis Económico Aplicado. Grupo de Economía de las Infraestructuras y el Transporte. Universidad de Las Palmas de Gran Canaria); Jordi Perdiguero (PPRE-IREA, Universitat de Barcelona) |
| Abstract: | Various methodologies in economic literature have been used to analyse the international hydrocarbon retail sector. Nevertheless at a Spanish level these studies are much more recent and most conclude that generally there is no effective competition present in this market, regardless of the approach used. In this paper, in order to analyse the price levels in the Spanish petrol market, our starting hypothesis is that in uncompetitive markets the prices are higher and the standard deviation is lower. We use weekly retail petrol price data from the ten biggest Spanish cities, and apply Markov chains to fill the missing values for petrol 95 and diesel, and we also employ a variance filter. We conclude that this market demonstrates reduced price dispersion, regardless of brand or city. |
| Keywords: | Competition, Petrol, Variance filter analysis, Gibbs sampling, Markov chain Monte Carlo. |
| JEL: | L13 L59 L71 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-5&r=mic |
| By: | Shchetinin, Oleg |
| Abstract: | The paper explores the analogy between city and two-sided market. It generalizes the results on the pricing strategies of the platform in the two-sided markets for the case when concentration spillover plays an important role. The two-sided market framework is applied to model a city. The paper highlights the importance of the network effect and labor market structure for city size, governance and agglomeration formation. The cases of an isolated city and competing cities are considered. |
| Keywords: | Two-sided markets; Industrial organization; Urban economics; Concentration spillover; City; Labor matching market |
| JEL: | D4 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15428&r=mic |
| By: | Kathryn Graddy; George Hall |
| Abstract: | We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model's predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small. |
| JEL: | D21 D4 L1 L81 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15019&r=mic |
| By: | Sadraoui Tarek (LORIA - ABC (Apprentissage et Biologie Computationnelle) - CNRS : UMR7503 - INRIA - Université Henri Poincaré - Nancy I - Université Nancy II - Institut National Polytechnique de Lorraine); Naceur Ben Zina (LORIA - ABC (Apprentissage et Biologie Computationnelle) - CNRS : UMR7503 - INRIA - Université Henri Poincaré - Nancy I - Université Nancy II - Institut National Polytechnique de Lorraine) |
| Abstract: | This paper investigates the relationship between private and public investment in R&D, while taking into account the effect of several instruments policies such as subsidies and taxes. We design a new look of knowledge spillovers and R&D cooperation to explain the contribution of public and private R&D on growth. We propose a heterogeneous dynamic panel data model to consider the endogenous effect of R&D investment. We also distinguish between the estimated long and short run results. Our results based on a sample of 23 countries over the period 1992-2004 indicate that both public and private investments in R&D are complementary. By establishing an endogenous growth model, the estimates indicate that public and private R&D depends on the host country's human capital investment. Results indicate that foreign direct investment is a more significant spillover channel than imports. |
| Keywords: | R&D investment; Technology Spillovers; Complementarities; Economic growth; Dynamic Panel Data; Cointegration; Unit root test; Private investment; Public investment; R&D cooperation |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00388525_v1&r=mic |
| By: | Boone, J.; Müller, W.; Suetens, S. (Tilburg University, Center for Economic Research) |
| Abstract: | We report experimental results on exclusive dealing inspired by the literature on "naked exclusion". Our key findings are: First, exclusion of a more efficient entrant is a widespread phenomenon in lab markets. Second, allowing incumbents to discriminate between buyers increases exclusion rates compared to the non-discriminatory case only when payments to buyers can be offered sequentially and secretly. Third, allowing discrimination does not lead to significant decreases in costs of exclusion. Accounting for the observation that buyers are more likely to accept an exclusive deal the higher is the payment, substantially improves the fit between theoretical predictions and observed behavior. |
| Keywords: | exclusive dealing;entry deterrence;foreclosure;contracts;externalities;coordination;experiments. |
| JEL: | C91 L12 L42 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200930&r=mic |
| By: | Bayo, Alberto (Universidad Publica de Navarra); Galdon-Sanchez, Jose E. (UC-Santa Cruz); Gil, Ricard (UC-Santa Cruz) |
| Abstract: | In this paper we empirically examine the determinants of changes in the organization of production using detailed information on a data set from a new plant-level survey of 1003 plants covering the full range of manufacturing industries in Spain. In particular, and among many other things, survey respondents were asked how service outsourcing practices had changed in the last three years. The answer to this question is indicative of the changes in the importance of backward integration for each of the plants studied. Using other information provided in the survey, we relate the reported changes in outsourcing to changes in other relevant dimensions as possible determinants of the boundaries of the firm. These dimensions are: plant size, downstream market power, cost of inputs, price and quality of the final good and technological progress. Our findings show that outsourcing increases are strongly positively correlated with increases in market share and in market competition. We also find that outsourcing increases when plants face simultaneous increases in product quality and product prices and that it decreases when plants face simultaneous increases in market share and market competition. Finally, we find that multi-plant and one-plant firms adjust their outsourcing practices differently to outside changes. Since neither TCE nor PRT theories of vertical integration fully explain the patterns found in our data, we close this paper by following Adam Smith's claim that the extent of the market seems to be the only factor consistently limiting the degree of specialization in our setting. |
| Keywords: | outsourcing; vertical integration; competition; manufacturing plants; |
| JEL: | L22 L23 L60 |
| Date: | 2009–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0783&r=mic |
| By: | Martin J Osborne; Ariel Rubinstein |
| Date: | 2009–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:814577000000000225&r=mic |
| By: | Michele Boldrin; David K Levine |
| Date: | 2009–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:814577000000000211&r=mic |
| By: | Anil. K Gupta |
| Abstract: | "Given the economic distress worldwide, the micro, small and medium scale enterprises (MSME) had been hit hard. Large numbers of workers have been laid off because of depressed demand, piled up inventory, pending retrievables and squeezed credit market. A sector which provides maximum employment cannot be left to fend for itself without a major transformation led by the entrepreneurs, policy makers and also other support organizations. There are several innovative options that one can try at four different levels such as (a) stimulating demand, (b) upgrading technology and skills, (c) promoting innovations for developing new products and services and (d) forging new partnerships among the entrepreneurs and also with the R&D institutions, grassroots innovation networks and the technology students.This is a painful time for the MSMEs and the workers being laid off. A bipartition approach is required among the major political parties to put forward a revitalization plan. Millions of workers and small entrepreneurs will anyway soon vote on the vision of the parties in taking country out of the current stressful situation.[IIMA WP NO 03]" |
| Keywords: | micro, small and medium scale enterprises; organized sector; industrial symbiosis; entrepreneurs; Upgrading technology; skills; Techpedia; National Innovation; National Innovation Foundation |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1958&r=mic |