|
on Microeconomics |
| By: | Pedro Rui Mazeda Gil (CEF.UP and Faculdade de Economia, Universidade do Porto) |
| Abstract: | We revisit the issue of self-fulfilling “waves of enthusiasm” as stationary rational expectations equilibrium outcomes in endogenous-growth models that merge the quality-ladders with the expanding-variety mechanism. By considering a lab-equipment specification with vertical-innovation intertemporal spillovers but no intersectoral spillovers, we extend previous results of a negative impact of animal spirits on both horizontal aggregate R&D and number of firms to a framework where decreasing returns to horizontal entry are not a necessary condition. In contrast, our general-equilibrium setting allows us to predict an effect of animal spirits on R&D composition impacting neither on aggregate growth nor on aggregate vertical R&D, as reduced outlays in “mature” industries compensate for the increased R&D intensity in newly-born industries. |
| Keywords: | endogenous growth, horizontal and vertical R&D, stationary sunspot equilibria |
| JEL: | O41 E32 D43 L16 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:336&r=mic |
| By: | Tatiana Plotnikova (DFG Research Training Program "The Economics of Innovative Change", Friedrich-Schiller-University Jena) |
| Abstract: | This paper empirically investigates the determinants of R&D diversification strategies in the drug industry. It enriches the existing literature by proposing to look at diversification factors, which reflect market and technological proximity of an R&D project towards other projects within a firm's portfolio as well as R&D competition factors. Additionally, the characteristics of R&D in the market where a new potential product is developed affiect future product choice. The analysis is performed for products-in-development data, merged with firms' patents, which allows us to separate project proximity in market niches from technological proximity. The results of empirical estimation support an idea that R&D diversification is governed by the economies of scope as well as the escape competition motive. Moreover, it is found that competition rather than spillovers in the niche where an R&D project is developed defines firms' decisions to diversify. |
| Keywords: | diversification, technological diversity, relatedness, competition, R&D |
| JEL: | O32 L25 L65 |
| Date: | 2009–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-078&r=mic |
| By: | Klaus Schmidt (University of Munich) |
| Abstract: | Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always benefits from entry and innovation |
| Keywords: | IP rights, complementary patents, standards, licensing, patent pool, vertical integration |
| JEL: | L1 L4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:273&r=mic |
| By: | Pflüger, Michael P. (University of Passau); Suedekum, Jens (University of Duisburg-Essen) |
| Abstract: | Entrepreneurs who decide to enter an industry are faced with different levels of effective entry costs in different countries. These costs are heavily influenced by economic policy. What is not well understood is how international trade affects the government incentive to impact on entry costs, and how entry subsidies can be used strategically in open economies. We present a general equilibrium model of monopolistic competition with two (potentially) asymmetric countries and heterogeneous firms where government subsidizes entry of domestic entrepreneurs. Under autarky the entry subsidy indirectly corrects for the monopoly pricing distortion. In the autarky equilibrium these subsidies trigger entry, but they eventually do not lead to more but to better firms in the market. In the open economy there is another, strategic motive for entry subsidies as the tightening of domestic market selection also affects exporting decisions for domestic and foreign firms. Our analysis shows that entry subsidies in the Nash-equilibrium are first increasing, then decreasing in the level of trade openness. This implies a U-shaped relationship between openness and effective entry costs. Merging cross-country data on entry costs with international trade openness indices we empirically confirm this theoretical prediction. |
| Keywords: | firm entry, subsidies, heterogeneous firms, international trade, monopolistic competition, entry regulation, strategic trade policy |
| JEL: | F12 F13 H25 L11 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4384&r=mic |
| By: | Dorothée Brécard (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | We examine the impact of an emission tax in a green market characterized by consumers' environmental awareness and competition between firms for both environmental quality and product prices. The unique aspect of this model comes from the assumption that the cost for an increase in quality is fixed. We show that the emission tax improves welfare, thanks to a decline in pollution and despite an accentuation of product differentiation. The higher the marginal environmental damage is, the higher the optimal tax will be. The optimal tax, however, becomes lower than the marginal damage when the market is not too large. Finally, when marginal environmental damage is not too low, the optimal tax leads to a green product monopoly. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00421176_v1&r=mic |
| By: | Carbo Valverde, Santiago; Fernández de Guevara y Rodoselovics, Juan; Humphrey, David; Maudos, Joaquin |
| Abstract: | We model bank oligopoly behaviour using price and non-price competition as strategic variables in an expanded conjectural variations framework. Rivals can respond to changes in both loan and deposit market prices as well as (non-price) branch market shares. The model is illustrated using data for Spain which, over 1986-2002, eliminated interest rate and branching restrictions and set off a competitive race to lock-in expanded market shares. Banks use both interest rates and branches as strategic variables and both have changed over time. We illustrate the results using a regional vs. a national specification for the relevant markets. |
| Keywords: | non-price competition; banking; market shares |
| JEL: | L13 D43 G21 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17612&r=mic |
| By: | Ronald Jean Degen (International School of Management Paris) |
| Abstract: | This paper explains how the increasingly popular social network driven ideation works for some companies, and how this can be expanded to encompass the complete crowdsourcing innovation process (beyond simple ideation). In a contemporary context, businesses that are unable to keep up with innovations are simply overrun by those who are more efficient at this. This results in the dilemma that confronts all innovating companies in the 21st century: while innovation is critical for survival of a company, internal R&D is an inefficient approach to innovation. As a result of this dilemma, today?s innovative companies generally conduct little or no basic research on their own. They mostly innovate using the research discoveries of others. Some of these companies promote ideation forums on social networks to gain ?memes? for innovative ideas. This first step in the crowdsourcing innovation process can be expanded to include all the remaining steps of the innovation process, up to marketing and selling the product or service, as these all originate from ?crowdsourcing ideation?. |
| Keywords: | social network driven innovation, ideation forums, crowdsourcing ideation, crowdsourcing innovation process, memes, mavens, connectors, influencers, nanostories, flash mobs, job to be done |
| JEL: | M0 M1 |
| Date: | 2009–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:47&r=mic |
| By: | Robert R. Routledge |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:0917&r=mic |
| By: | Dorothée Brécard (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | In this paper, we analyse the effects of the introduction of a unit production cost beside a fixed cost of quality improvement in a duopoly model of vertical product differentiation. Thanks to an original methodology, we show that a low unit cost tends to reduce product differentiation and thus prices, whereas a high unit cost leads to widen product differentiation and to increase prices |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00421171_v1&r=mic |
| By: | Anna Ilyina; Roberto M. Samaniego |
| Abstract: | This paper develops a multi-industry growth model in which firms require external funds to conduct productivity-enhancing R&D. The cost of research is industry-specific. The tightness of financing constraints depends on the level of financial development and on industry characteristics. Over time, a financially constrained economy may converge to the growth path of a frictionless economy, so long as an industry with the fastest expanding technological frontier does not permanently fall behind due to low R&D. The model’s industry dynamics map into a differences-in-differences regression, in which industry growth depends on the interaction between financial development and industry level R&D intensity. |
| Keywords: | Economic growth , Economic models , External financing , External sector , Industrial sector , Production , Productivity , |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:09/119&r=mic |
| By: | Johansson, Sara (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This empirical analysis focus on the impact of firm characteristics, firms’ export experiences and location-specific variables on export decisions in Swedish manufacturing firms. Three choices of export market participation are considered: permanent export, occasional export and no export. The paper also analyzes firms’ choice of expanding export activities. The empirical results indicate that firm-level variables such as size, human capital intensity and labor productivity increases the probability of a firm being a permanent exporter rather than an occasional or non-exporter. Moreover, firms located in regions with a high concentration of other firms exporting commodities in the same product group have a higher probability of both permanent and occasional export market participation. The results also show a significant positive effect of firms’ export experiences in the previous period on the probability that a firm becomes a permanent exporter in the current period. The analysis of export market expansion suggest that firms with high human capital intensity and experiences from exporting several products to several markets are more likely to introduce a new export product. The probability of expanding to new geographical markets seems to be increasing with firm-level labor productivity and export experiences from multiple markets in previous periods. |
| Keywords: | export behavior; firm heterogeneity; learning-by-exporting; experiential knowledge; knowledge spillover; agglomeration economies |
| JEL: | F14 |
| Date: | 2009–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0196&r=mic |
| By: | Bejan, Camelia; Bidian, Florin |
| Abstract: | We analyze the limit behavior of sequences of oligopolistic equilibria in which firms follow objectives consistent with their shareholders' interests. We show that the efficiency of the limit allocation depends on how firms' shares are distributed across consumers, and provide a characterization of the class of ownership structures that lead to Walrasian equilibrium allocations in the limit. |
| Keywords: | the objective of the firm; oligopolistic competition; ownership structure; efficiency |
| JEL: | D21 C02 D51 D43 G30 |
| Date: | 2009–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17677&r=mic |
| By: | Caitlin Knowles Myers; Grace Close; Laurice Fox; John William Meyer; Madeline Niemi |
| Abstract: | Higher retail prices are frequently cited as a cost of living in poor, minority neighborhoods. However, the empirical evidence, which primarilycomes from the grocery gap literature on food prices, has been mixed. This study uses new data on retail gasoline prices in three major U.S.cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that gasoline prices do not varygreatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10 percentage point increase in the percentof families with incomes below the poverty line relative to families with incomes between 1 and 2 times the poverty line, retail gasoline prices are estimated to increase by an average of 0.70 percent. This differential is reduced to 0.22 percent once we add controls for costs, competition, and demand. Finally, we provide evidence that the remaining, small, price differential for poor neighborhoods is likely the result of traditional price discrimination in response to less competition and/or more inelastic demand in these locations. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:0906&r=mic |
| By: | Ben Shiller; Joel Waldfogel |
| Abstract: | Economists have well-developed theories that challenge the wisdom of the common practice of uniform pricing. With digital music as its context, this paper explores the profit and welfare implications of various alternatives, including song-specific pricing, various forms of bundling, two-part tariffs, nonlinear pricing, and third-degree price discrimination. Using survey-based data on nearly 1000 students’ valuations of 100 popular songs in early 2008 and early 2009. We find that various alternatives – including simple schemes such as pure bundling and two-part tariffs – can raise both producer and consumer surplus. Revenue could be raised by between a sixth and a third relative to profit-maximizing uniform pricing. While person-specific uniform pricing can raise revenue by over 50 percent, none of the non-discriminatory schemes raise revenue’s share of surplus above 40 percent of total surplus. Even with sophisticated pricing, much of the area under the demand curve for this product cannot be appropriated as revenue. |
| JEL: | L12 L82 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15390&r=mic |
| By: | María Callejón (Facultat d'Economia i Empresa, Avda. Diagonal 690, 08034 Barcelona, Spain); Vicente Ortún (Department of Economics and Business, Universitat Pompeu Fabra, Barcelona, Spain) |
| Abstract: | Research in business dynamics has been advancing rapidly in the last years but the translation of the new knowledge to industrial policy design is slow. One striking aspect in the policy area is that although research and analysis do not identify the existence of an specific optimal rate of business creation and business exit, governments everywhere have adopted business start-up support programs with the implicit principle that the more the better. The purpose of this article is to contribute to understand the implications of the available research for policy design. Economic analysis has identified firm heterogeneity as being the most salient characteristic of industrial dynamics, and so a better knowledge of the different types of entrepreneur, their behavior and their specific contribution to innovation and growth would enable us to see into the ‘black box’ of business dynamics and improve the design of appropriate public policies. The empirical analysis performed here shows that not all new business have the same impact on relevant economic variables, and that self-employment is of quite a different economic nature to that of firms with employees. It is argued that public programs should not promote indiscriminate entry but rather give priority to able entrants with survival capacities. Survival of entrants is positively related to their size at birth. Innovation and investment improve the likelihood of survival of new manufacturing start-ups. Investment in R&D increases the risk of failure in new firms, although it improves the competitiveness of incumbents. |
| Keywords: | Industrial dynamics, industrial policy, creative destruction, business demography. |
| JEL: | D21 L16 L52 M13 O25 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-7&r=mic |