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on Microeconomics |
| By: | Maria Cristina Barbot (CEF.UP, Faculdade de Economia, Universidade do Porto) |
| Abstract: | This paper addresses the case of complementary services with vertical relations. Using the example of airport handling activities, we develop a model to investigate the effects on welfare and competitiveness of four different handling market situations. We find out that the usual Cournot result on welfare when firms compete in complementary goods is verified unless there are efficiency gaps between the firms, or if vertically related firms also compete on the same market. We also find that the presence of a horizontally integrated firm may lead to market foreclosure. Moreover, we add a few remarks on regulatory issues, where we show that regulation may be pointless or even anti-competitive. In particular, we show that Council Directive 96/67/EC, while intending to increase competition, may lead to anti-competitive situations and consumers surplus decreases. |
| Keywords: | Complementary goods competition; airport handling; vertical relations. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:1001&r=mic |
| By: | Thomas Giebe (Humboldt University at Berlin) |
| Abstract: | We consider procurement of an innovation fromheterogeneous sellers. Innovations are random but depend on unobservable effort and private information. We compare two procurement mechanisms where potential sellers first bid in an auction for admission to an innovation contest. After the contest, an innovation is procured employing either a fixed prize or a first–price auction. We characterize Bayesian Nash equilibria such that both mechanisms are payoff–equivalent and induce the same efforts and innovations. In these equilibria, signaling in the entry auction does not occur since contestants play a simple strategy that does not depend on rivals’ private information. |
| Keywords: | Contest, Auction, Innovation, Research, R&D, Procurement, Signaling |
| JEL: | D21 D44 D82 H57 O31 O32 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:307&r=mic |
| By: | Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Javier Suarez (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | We assess the effects of imitation and intellectual property (IP) protection in a model of industry dynamics in which the value of IP is eroded by further innovations and imitations. Innovations result from the development of ideas engendered by entrepreneurs. We find that innovation and welfare are decreasing in the protection of IP against further innovations, while their relationship with the protection against imitations typically has an inverted-U shape (partly because imitation reduces the resistance of incumbents to innovators). We also find that the welfare gains from increasing IP protection increase if entrepreneurs are financially constrained. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2010_1001&r=mic |
| By: | Alejandro Saporiti |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:1003&r=mic |
| By: | Bouguezzi, Fehmi |
| Abstract: | This paper compares patent licensing regimes in a Hotelling model where firms are located symmetrically and not necessary at the end points of the city. I suppose that one of the firms owns a process innovation reducing the marginal unit cost. This patent holding firm will decide to sell a license or not to the non innovative firm and will choose, when licensing, between a fixed fee or a royalty. The key difference between this paper and other papers is that here I suppose that firms are not static and can move along the linear city symmetrically. I find that when there is no licensing, Nash equilibrium exists only when innovation is non drastic. I also find that royalties licensing is better than fixed fee licensing when innovation is small. When the innovation is intermediate I find that fixed fee is better than a royalty. The paper shows that a fixed fee is not better than a non licensing regime independently of the innovation size and the optimal licensing regime is royalties when innovation is small. Finally, I show that a patent holding firm should not license its innovation when it is intermediate or drastic |
| Keywords: | Hotelling model; Technology transfer; Patent licensing |
| JEL: | L0 D45 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21055&r=mic |
| By: | Francesco Giuli (University of Rome La Sapienza, Department of Public Economics, Italy); Marco Manzo (Ministry of Economics, Italy and OECD) |
| Abstract: | We apply a three-tier hierarchical model of regulation, developed along the lines of Laffont and Tirole (1993), to an adverse selection problem in the corporate bond market. The bank brings the bonds to the market and informs the potential buyers about the bond risks; a unique benevolent public authority aims at maximising investors welfare. The main goal is to investigate whether this unique authority is able to fully inform the market on a firms true credit worthiness when banks, in order to recover doubtful credits, favour the placement of bonds issued by levered firms by concealing their true risk. By establishing the necessary conditions that allow optimal sanctions to produce the first best equilibrium, we show that the core problem of adverse selection in the corporate bond market does not lie so much in the benevolence of the delegated monitoring system, but rather in the possibility of affecting and sanctioning a firms behaviour. |
| Keywords: | Corporate bond, Incentives, Collusion, Regulation |
| JEL: | D82 G28 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:voj:wpaper:200942&r=mic |
| By: | Czarnitzki, Dirk; Thorwarth, Susanne |
| Abstract: | This paper explores the contribution of design activities on product market performance of Belgian companies. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not been linked to the open innovation concept yet. In this paper we empirically test whether design activities conducted in-house differ in their contribution to new product sales from externally acquired design. Using a large crosssection of manufacturing and service firms, we investigate the effects on sales of products new to the market and of imitation or significantly improved products of the firm. At first glance, we find the paradox that externally acquired design is not superior to in-house design activities. This effect is robust to several modifications of the model specification. As earlier literature on new technological developments in high-tech sectors, we argue, however, that external design may not affect the sales of market novelties as the “market news” may spill-over quickly to rivals through common customers and suppliers including external designers. |
| Keywords: | Design; R&D; Collaboration; Open Innovation; Product Market Performance; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250665&r=mic |
| By: | Gil, Ricard; Warzynski, Frédéric |
| Abstract: | This paper empirically investigates the relation between vertical integration and video game performance in the U.S. video game industry. For this purpose, we use a widely used data set from NPD on video game montly sales from October 2000 to October 2007. We complement these data with handly collected information on video game developers for all games in the sample and the timing of all mergers and acquisitions during that period. By doing this, we are able to separate vertically integrated games from those that are just exclusive to a platform First, we show that vertically integrated games produce higher revenues, sell more units and sell at higher prices than independent games. Second, we explore the causal effect of vertical integration and find that, for the average integrated game, most of the difference in performance comes from better release period and marketing strategies that soften competition. By default, vertical integration does not seem to have an effect on the quality of video game production. We also find that exclusivity is associated with lower demand. |
| Keywords: | vertical integration; exclusivity; performance; video games |
| JEL: | L14 D23 L20 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21049&r=mic |
| By: | Liran Einav; Jonathan D. Levin |
| Abstract: | The field of Industrial Organization has made dramatic advances over the last few decades in developing empirical methods for analyzing imperfect competition and the organization of markets. We describe the motivation for these developments and some of the successes. We also discuss the relative emphasis that applied work in the field has placed on economic theory relative to statistical research design, and the possibility that a focus on methodological innovation has crowded out applications. We offer some suggestions about how the field may progress in coming years. |
| JEL: | C8 L0 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15786&r=mic |
| By: | Yasuhiro Arai |
| Abstract: | We discuss the software patent should be granted or not. There exist two types of coping in the software market; reverse engineering and software duplication. Software patent can prevent both types of copies since a patent protects an idea. If the software is not protected by a patent, software producer cannot prevent reverse engineering. However, the producer can prevent the software duplication by a copyright. It is not clear the software patent is socially desirable when we consider these two types of coping. We obtain the following results. First, the number of copy users under the patent protection is greater than that under the copyright protection. Second, the government can increase social welfare by applying copyright protection when the new technology is sufficiently innovative. |
| Keywords: | Copyright Protection, Intellectual Property Right, Software |
| JEL: | D42 K39 L86 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-112&r=mic |
| By: | Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Joshua R. Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | We study prediction and error propagation in Hernes, Gompertz, and logistic models for innovation diffusion. We develop a unifying framework in which the models are linearized with respect to cohort age and predictions are derived from the underlying linear process. We develop and compare methods for deriving the predictions and show how Monte Carlo simulation can be used to estimate prediction uncertainty for a wide class of underlying linear processes. For an important special case, random walk with, we develop an analytic prediction variance estimator. Both the Monte Carlo method and the analytic variance estimator allow the forecasters to make precise the level of within-model prediction uncertainty in innovation diffusion models. Empirical applications to first births, first marriages and cumulative fertility illustrate the usefulness of these methods. |
| JEL: | J1 Z0 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2010-013&r=mic |
| By: | Yucel, Eray; Tokel, Emre |
| Abstract: | All decisions are practically made within a chainwise social setup named a decision-making chain (DMC). This paper considers some cases of an idea (a project proposal) propagating through an organizational DMC. Survival of a proposal through successive links of the DMC depends on the relative power of those links, in addition to proposal’s intrinsic value. Then it is not impossible to reject a good proposal or to fail to reject a bad proposal, either of which may generate undesired, though not detrimental, outcomes. We consider here a simple metric to assess quality of decision-making. The notion of quality here derives from “not declining (not accepting) a project that is of high (poor) intrinsic value”. As Fibonacci series establish the mathematical basis of our proposed metric, metric is simply named a Fibonacci metric. |
| Keywords: | Decision making chains; Innovation; Fairness metric; Fibonacci series |
| JEL: | Z1 C00 A1 |
| Date: | 2010–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20973&r=mic |
| By: | Antoci Angelo; Sabatini Fabio; Sodini Mauro |
| Abstract: | We develop a dynamic model to analyze the sources and the evolution of social participation and social capital in a growing economy characterized by exogenous technical progress. Starting from the assumption that the well-being of agents basically depends on material and relational goods, we show that the best-case scenarios hold when technology and social capital both support just one of the two productions at the expenses of the other. However, trajectories are possible where technology and social interaction balance one another in fostering the growth of both the social and the private sector of the economy. Along such tracks, technology may play a crucial role in supporting a “socially sustainable” economic growth. |
| Keywords: | Technology, economic growth, relational goods, social participation, social capital |
| JEL: | O33 J22 O41 Z13 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ter:wpaper:0062&r=mic |
| By: | Lecocq, Catherine; Leten, Bart; Kusters, Jeroen; Van Looy, Bart |
| Abstract: | This paper investigates whether firms active in biotechnology can improve their technological performance by developing R&D activities in technology clusters. Regions that host a concentration of biotechnology activity are identified as technology clusters (level of US states, Japanese prefectures and European NUTS2 regions). A fixed effect panel data analysis on a set of 59 biopharmaceutical firms (period 1995-2002) provides evidence for a positive, albeit diminishing (inverted-U shape) relationship between the number of technology clusters in which a firm is present and its total technological performance. This effect is distinct from a mere multi-location effect. |
| Keywords: | Cluster; Innovation; Biotechnology; |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/249147&r=mic |
| By: | Gijsenberg, Maarten; van Heerde, Harald J.; Dekimpe, Marnik; Steenkamp, Jan-Benedict E.M. |
| Abstract: | In this study, the authors conduct a systematic investigation on the evolution in the effectiveness of two important marketing mix instruments, advertising and price, over the business cycle. Analyses are based on 163 branded products in 37 mature CPG categories in the UK, and this for a period of 15 years. The data are a combination of (i) monthly national sales data, (ii) monthly advertising data, (iii) data on the general economic conditions, and (iv) consumer survey data. Consumers are shown to be more price sensitive during contractions. In addition, spending patterns will be less consistent, implying smaller brand loyalty. Advertising elasticities, however, do not seem to be affected by economic downturns. Product involvement was shown to be an influential moderator of the final effect of advertising, price and carry-over effects on sales. Finally, although short run effectiveness of price differs between expansions and contractions, the long run effectiveness of both advertising and price is not altered by differences in the general economic conditions. |
| Keywords: | advertising; price; effectiveness; business cycle; time-series econometrics; Bayesian inference; |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/229404&r=mic |
| By: | Tiwari, Sailesh; Zaman, Hassan |
| Abstract: | This paper estimates the impact of the 2008 food price spike and the 2009 contraction in global growth on undernourishment rates. The analysis is based on a methodology that uses a calorie-income relationship and income distribution data. The authors find that the 2008 global food price spike may have increased global undernourishment by about 6.8 percent, or 63 million people. Moreover, they show that the sharp slowdown in global growth in 2009 could have contributed to 41 million more undernourished people compared with what would have happened if the economic crisis had not occurred. |
| Keywords: | Food&Beverage Industry,Markets and Market Access,Emerging Markets,Economic Theory&Research,Regional Economic Development |
| Date: | 2010–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5215&r=mic |
| By: | Czarnitzki, Dirk; Binz-Hottenrott, Hanna Léontine; Thorwarth, Susanne |
| Abstract: | Previous literature provided evidence on financing constraints for investment in R&D activities due to capital market imperfections and special features of R&D investments. Moreover, it has been shown that a shift in capital structure towards more debt, results in a reduction of R&D investments. This article complements this literature by compartmentalizing R&D activities in its components, ‘R’ and ‘D’. In particular, we distinguish research from development as these activities do not only differ in their nature, but also to a large extent take place sequentially. Our results show that ‘R’ investment is more sensitive to the firms’ operating liquidity than ‘D’ indicating that firms have to rely even more on internal funds for financing their research compared to development activities. Moreover, we find that (basic) research subsidy recipients’ investment is less sensitive to internal liquidity. |
| Keywords: | Research and Development; Liquidity Constraints; Innovation Policy; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250659&r=mic |