nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2005‒08‒03
six papers chosen by
Roberto Fontana
Universita Bocconi

  2. Beggar thy neighbor? the in-state vs. out-of-state impact of state R&D tax credits By Daniel J. Wilson
  3. An Exploration into Competition and Efficiency in the Dutch Life Insurance Industry By Jaap Bikker; Michiel van Leuvensteijn
  4. On Tariff, Quality Choice and Innovation in a Vertically Differentiated Monopoly with Discrete Preferences By Rajat Acharyya; Swapnendu Banerjee
  5. Indicators for Complex Innovation Systems By Sylvan Katz
  6. Migration and technological change in rural households: complemen ts or substitutes? By Mariapia MENDOLA

  1. By: Maria Belen Usero; Zulima Fernandez
    Abstract: This study examines the relationship between erosion of the first-mover’s market share and the differences in competitive behaviour of pioneer firms and followers. Particularly, we pay particular attention to market actions related to innovation, pricing and promotion, and to non-market actions related to judicial issues. The empirical study has been carried out with companies that are present in a dynamic context, such as the European mobile telephone industry. Our results show that when followers take more non-market actions than pioneers the negative effect on the firstentrant’s advantage is more significant. On the contrary, we have not found a significant impact of innovating and pricing actions.
    Date: 2005–07
  2. By: Daniel J. Wilson
    Abstract: In this paper, I exploit the cross-sectional and time-series variation in R&D tax credits, and in turn the user cost of R&D, available from U.S. states between 1981-2002 to estimate the elasticity of private R&D with respect to both the within-state (internal) user cost and the out-of-state (external) user cost. To faciliate comparisons to previous studies of the R&D cost elasticity, I first estimate an R&D cost elasticity omitting external R&D costs; the estimated elasticity is negative, above unity (in absolute value), and statistically significant—a finding quite similar to that found by previous studies based on alternative data. Unlike previous studies, however, I then add the external R&D user cost to the regressions. I find the external-cost elasticity is positive and significant, raising concerns about whether having state-level R&D tax credits on top of federal credits is socially desirable. More importantly, I find the aggregate R&D price elasticity—the difference between the internal- and external-cost elasticities—is far smaller than previously estimated. In fact, the preferred specification yields a zero aggregate elasticity, suggesting a zero-sum game among states and raising questions about the efficacy of R&D tax credits more broadly.
    Keywords: Taxation ; Research and development
    Date: 2005
  3. By: Jaap Bikker; Michiel van Leuvensteijn
    Abstract: The lack of available prices in the Dutch life insurance industry makes competition an elusive concept that defies direct observation. Therefore, this paper investigates competition by analysing several factors which may affect the competitive nature of a market and various indirect measurement approaches. After discussing various supply and demand factors whic h may constitute a so-called tight oligopoly, we establish the existence of scale economies and the importance of cost Xinefficiency, since severe competition would force firms to exploit available scale economies and to reduce X-inefficiencies. Both scale economies and X-inefficiencies turn out to be substantial, although more or less comparable to those found for insurers in other countries and to other financial institutions. Further, we apply the Boone indicator, a novel approach to measuring the effects of competition. This indicator points to limited competition in comparison to other sectors in the Netherlands. Further investigations of submarkets should reveal where policy measures in order to promote competition might be appropriate.
    Keywords: Life insurance; market structure; concentration; competition; scale economies; X-inefficiency; profit margins; Boone indicator; translog cost functions; stochastic cost frontier approach.
    JEL: D4 D61 G22 L1
    Date: 2005–07
  4. By: Rajat Acharyya (Jadavpur University); Swapnendu Banerjee (National University of Singapore)
    Abstract: In a vertically differentiated monopolistic framework with discrete preferences we examine how protecting the low-quality segment raises the incentive for quality innovation. We show how the monopolist facing competitive imports, might fail to exert its complete monopoly power even if there is prohibitive tariff on both the high and low quality segment of the market. On the other hand, given non prohibitive tariff on the high quality segment, the potential gain for the monopolist exhausts at a level much below the prohibitive low-quality tariff level. Also a sufficiently low tariff on the high quality product can force the monopolist to produce the first best qualities irrespective of the tariff level on the low quality product
    Keywords: F13, L12, L15
  5. By: Sylvan Katz (SPRU, University of Sussex)
    Abstract: Innovation systems are complex systems that can exhibit scaling and emergent properties. Predictable and measurable scaling correlations exist between measures commonly used to characterize innovation systems and national economies. This paper examines scaling relationships between GERD & GDP and between GDP & population and uses them to construct scale-independent indicators of the European and Canadian innovation systems. It discusses the theory and practice of building scale- independent indicators and scale-independent models. The theory is based on knowledge gathered from the study of complex systems. The practice is illustrated using OECD and Statistics Canada data commonly used to construct conventional indicators.
    Keywords: complex system, scaling, power law, emergent properties, innovation, innovation system, indicators, scale-independent, model
    JEL: O33
    Date: 2005–07–26
  6. By: Mariapia MENDOLA
    Abstract: In this paper we study the interrelationship between determinants of migration, conceived as a family strategy, and the potential impact of having a migrant household member on people left behind . Labour migration is often related to poverty but given its lump y-investment nature, poverty may constitute a motivation to migra te as well as a constraint to do it. We use cross-sectional house hold data from two rural regions of Bangladesh to test whether mi gration is a form of income diversification strategy that signifi cantly influences the risk-taking behaviour of source farm househ olds in agricultural activities. We account for heterogeneity of migration constraints differentiating between domestic (temporary and permanent) and international moving destinations. We find th at richer and large-holder households are more likely to particip ate in costly high-return migration (i.e. international migration ) and employ modern technologies, thereby achieving higher produc tivity. Poorer households, on the other hand, are not able to ove rcome entry costs of moving abroad and fall back on migration wit h low entry costs, and low returns (i.e. domestic migration); the latter does not help them to achieve production enhancements and may act as a poverty-trap locking households into persistent pov erty.
    Keywords: Internal and International Migration, Farm Household Behaviour, Agricultural Production Choices.

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