nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2005‒11‒12
eight papers chosen by
Roberto Fontana
Universita Bocconi

  1. Innovation races: An experimental study on strategic research activities By Uwe Cantner; Andreas Nicklisch; Torsten Weiland
  2. Learning, Product Innovation and Firm Heterogeneity in Tanzania By Goedhuys, Micheline
  3. "Collective Knowledge, Prolific Inventors and the Value of Inventions: An Empirical Study of French, German and British Owned U.S. Patents, 1975-1998." By William R. Latham; C. Gay and C. Le Bas; Christian Le Bas
  4. Cash and the Counter: Capabilities and Preferences in the Demand for Banking Technologies By Davide Consoli
  5. " Persistence of Firm Innovative Behavior: Towards an Evolutionary Theory." By William R. Latham; Christian Le Bas
  6. Local Competition and Impact of Entry by a Dominant Retailer By Ting Zhu; Vishal Singh; Anthony J. Dukes
  7. Identifying Age, Cohort and Period Effects in Scientific Research Productivity: Discussion and Illustration Using Simulated and Actual Data on French Physicists By Bronwyn H. Hall; Jacques Mairesse; Laure Turner
  8. The price setting behaviour of spanish firms - evidence from survey data By Luis J. Álvarez; Ignacio Hernando

  1. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Nicklisch (Max-Planck-Institute for Research into Collective Goods); Torsten Weiland (Max-Planck-Institute for Economics, Strategic Interactions Group)
    Abstract: In an experimental setting, firms in a duopoly market engage in a patent tournament and compete for profit-enhancing product advancements. The firms generate income by matching exogenously defined demand preferences with an appropriately composed product portfolio of their own. Demand preferences are initially unknown and first need to be revealed by an investigation of the possible product variations. The better firms approximate demand preferences, the higher their profits. In the ensuing innovation race, firms interact through information spillovers resulting from the imperfect appropriability of research successes. In the random period of the experiment, the continuity of the search process is disturbed by an exogenous shock that affects both the supply and demand side and again spurs research competition. Firms may henceforth explore an enlarged product space in attempting to match the equally modified demand preferences. In our analysis, we explore the behavioural regularities of agents who are engaged in innovation activities. As a key element we test to what extend relative economic performance exercises a stimulating effect on the implementation of innovation and imitation strategies.
    Keywords: Innovation, Imitation, Patent Tournament, Trial and Error Process
    JEL: D81 O31
    Date: 2005–11–07
  2. By: Goedhuys, Micheline (United Nations University, Institute for New Technologies)
    Abstract: Using a unique firm level data set on learning and product innovation in Tanzanian manufacturing and commercial farming, this paper sheds light on the various sources of firm learning, investment and collaboration and their relative importance for product innovation. The results indicate that larger and foreign owned firms invest significantly more in human and physical capital than do local micro, small and medium sized firms, and they are better connected to the internet. Their ways of upgrading technology also reveals a better financial endowment. Small and medium sized firms on the other hand report to collaborate more intensively with other local firms on product development, marketing and on the input market and upgrade technology through in-house activities, imitation and cooperation with suppliers and universities. By doing so, they are able to offset the scale disadvantages they face in competing for the market information and inputs – new machinery and specialised labour - necessary for product innovation in imperfect markets.
    Keywords: learning, innovation, technological change, competitiveness, multinational corporations, MNEs, small and medium enterprises, SMEs, investment, Tanzania
    Date: 2005
  3. By: William R. Latham (Department of Economics,University of Delaware); C. Gay and C. Le Bas; Christian Le Bas
    Abstract: The aim of this paper is to test two related propositions: (1) that there is a direct, positive relationship between the involvement of a prolific inventor in the production of knowledge and the magnitudes in the collective dimension of this knowledge production, as measured by the presence of foreign inventors and the size of the inventive team; and (2) that there is a direct, positive relationship between the involvement of a prolific (or foreign) inventor and the value of the new knowledge produced. We use detailed information from nearly 300,000 patents granted by the US Patent Office to French, German and British inventors over the period from 1975 to 1999. From data available from each patent regarding citations of prior patents and the numbers and identities of the inventors listed in the patent application, we are able to construct measures of collective knowledge, the presence of prolific inventors, and the imputed value of patents. In a novel approach in this literature, we estimate negative binomial multiple regression models for determining measures of both collective knowledge and the value of the patents. We find strong support, after controlling for technological field effects, for hypotheses that both prolific and foreign inventors tend to be parts of larger teams of inventors and that both prolific and foreign inventors tend to produce inventions having more value. In the conclusion, we draw some implications of these results for knowledge governance.
    Keywords: Inventors, patents, prolific
    JEL: O31 O32
    Date: 2005
  4. By: Davide Consoli (CRIC - Institute of Innovation Research, University of Manchester UK)
    Abstract: The main argument of this paper is that consumption and demand, like production, are discovery processes guided by trial-and-error and learning by consuming. The key question that is addressed is: how do consumers deal with innovation? By bringing together a number of threads within the innovation literature my claim is that consumers, akin to firms, follow routines that shape their consumption bundle, conceived here as an ensemble of activities rather than a bunch of goods. The analysis developed in the paper takes a very specific angle by elaborating on empirical evidence on the patterns of use of retail payment services in the United Kingdom to appreciate how consumption and demand can be shaped by the intertwined evolution of capabilities and preferences.
    Keywords: Retail Banking; Innovation; Demand; Consumer Capabilities
    JEL: L10 L23
    Date: 2005–11–08
  5. By: William R. Latham (Department of Economics,University of Delaware); Christian Le Bas
    Abstract: A growing body empirical literature deals with persistence in innovation. However, there is neither a survey of the development and status of the field nor a clear statement of a theory of persistence which includes a formal model of the dynamics of firm persistence. This paper fills these gaps by first providing a survey of previous studies of persistence, then presenting a theory, based on the evolutionary approach, to explain the choice of firms to innovate persistently, sporadically or not at all, and finally describing a formal model which shows some striking results corroborated by recent empirical evidence.
    Keywords: Persistence, Innovation, Evolutionary
    JEL: O31 B52
    Date: 2005
  6. By: Ting Zhu (Carnegie Mellon University); Vishal Singh (Carnegie Mellon University); Anthony J. Dukes (School of Economics and Management, University of Aarhus)
    Abstract: This paper analyzes the competition between two spatially differentiated multi-product retailers who encounter entry from a dominant discount retailer. Our primary objective is to determine how entry affects the pricing and relative profits of the incumbent stores and the role played by the location of the entrant. The new entrant has partial overlap in product assortment with the incumbents and is assumed to have lower procurement costs for the common goods. Consumers are heterogeneous in their location, economic status (shopping costs and valuations), as well as purchase basket or the types of products demanded. Results show that in the post entry equilibrium, the prices for the products not offered by the discounter are higher than the pre entry prices. More interestingly, contrary to the conventional wisdom we find that the store that is closer to the new entrant is better off compared to the incumbent located further away. The intuition for these results is that the discounter with its low price draws away the poor consumers – the price sensitive segment – out of the market for the items it carries. This in turn softens price competition between the incumbents for these items. Furthermore, the new entrant’s unique product offering attracts more consumers to visit the location it occupies, which introduces positive demand externalities to the neighboring retailer, leading to an increase in sales for the non-competing products. We provide empirical evidence for our results and discuss implications for retailers facing competition from large discount stores.
    Keywords: entry; retail competition; agglomeration
    JEL: L13 L81 M31
    Date: 2005–05
  7. By: Bronwyn H. Hall; Jacques Mairesse; Laure Turner
    Abstract: The identification of age, cohort (vintage), and period (year) effects in a panel of individuals or other units is an old problem in the social sciences, but one that has not been much studied in the context of measuring researcher productivity. In the context of a semi-parametric model of productivity where these effects are assumed to enter in an additive manner, we present the conditions necessary to identify and test for the presence of the three effects. In particular we show that failure to specify precisely the conditions under which such a model is identified can lead to misleading conclusions about the productivity-age relationship. We illustrate our methods using data on the publications 1986-1997 by 465 French condensed matter physicists who were born between 1936 and 1960.
    JEL: C23 O31 J44
    Date: 2005–11
  8. By: Luis J. Álvarez (Banco de España, Alcalá 48, 28014 Madrid, Spain); Ignacio Hernando (Banco de España, Alcalá 48, 28014 Madrid, Spain)
    Abstract: This paper reports the results of a survey carried out by the Banco de España on a sample of around 2000 Spanish firms to deepen the understanding of firms’ price setting behaviour. The main findings may be summarised as follows. Most Spanish firms are price setters that use predominantly state-dependent rules or a combination of time- and statedependent rules when reviewing their prices. Changes in costs are the main factor underlying price increases, whereas changes in market conditions (demand and competitors’ prices) are the main driving forces of price decreases. The degree of price flexibility is directly related to the share of energy inputs over total costs and to the intensity of competition, whereas it is inversely linked to the labour share. The three theories of price stickiness that receive the highest empirical support are implicit contracts, coordination failure and explicit contracts.
    Keywords: Price setting; price stickiness; survey data.
    JEL: D40 E31
    Date: 2005–10

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