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on Technology and Industrial Dynamics |
| By: | Alka Chadha (Department of Economics, National University of Singapore) |
| Abstract: | This paper studies the impact of the strict patent regime on the patenting activity of Indian pharmaceutical firms and finds that patenting activity of these firms has increased after the signing of TRIPs. The study is conducted for 65 pharmaceutical firms for the period 1991 to 2004 using different parametric and semiparametric count panel data models. Results across different count data models indicate a positive and significant impact of the introduction of stronger patents on patenting activity. Further, the results show a gestation lag of two years between R&D spending and patent applications. |
| Keywords: | Pharmaceuticals, Patents |
| JEL: | L65 |
| URL: | http://d.repec.org/n?u=RePEc:nus:nusewp:wp0512&r=tid |
| By: | Olav Sorenson; Jan W. Rivkin; Lee Fleming |
| Abstract: | Scholars from a variety of backgrounds – economists, sociologists, strategists, and students of technology management – have sought a better understanding of why some knowledge disperses widely while other knowledge does not. In this quest, some researchers have focused on the characteristics of the knowledge itself (e.g., Polanyi, 1966; Reed and DeFillippi, 1990; Zander and Kogut, 1995) while others have emphasized the social networks that constrain and enable the flow of knowledge (e.g., Coleman et al., 1957; Davis and Greve, 1997). This chapter examines the interplay between these two factors. Specifically, we consider how the complexity of knowledge and the density of social relations jointly influence the movement of knowledge. Imagine a social network composed of patches of dense connections with sparse interstices between them. The dense patches might reflect firms, for instance, or geographic regions or technical communities. When does knowledge diffuse within these dense patches circumscribed by social boundaries but not beyond them? Synthesizing social network theory with a view of knowledge transfer as a search process, we argue that knowledge inequality across social boundaries should reach its peak when the underlying knowledge is of moderate complexity. To test this hypothesis, we analyze patent data and compare citation rates across three types of social boundaries: within versus outside the firm, geographically near to versus far from the inventor, and internal versus external to the technological class. In all three cases, the disparity in knowledge diffusion across these borders is greatest for knowledge of an intermediate level of complexity. |
| Keywords: | evolutionary economics, informational complexity, knowledge flow, social boundaries |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0511&r=tid |
| By: | Zhu Wang |
| Abstract: | This paper explains market turbulence, such as the recent dotcom boom/bust cycle, as equilibrium industry dynamics triggered by technology innovation. When a major technology innovation arrives, a wave of new firms enter the market implementing the innovation for profits. However, if the innovation complements existing technology, some new entrants will later be forced out as more and more incumbent firms succeed in adopting the innovation. It is shown that the diffusion of Internet technology among traditional brick-and-mortar firms is indeed the driving force behind the rise and fall of dotcoms as well as the sustained growth of e-commerce. Empirical evidence from retail and banking industries supports the theoretical findings. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkpw:psrwp05-02&r=tid |
| By: | Annabelle Gawer; Rebecca Henderson |
| Abstract: | This paper draws on a detailed history of Intel's strategy with respect to the complementary markets for microprocessors to explore the usefulness of the current theoretical literature for explaining behavior. We find that as the literature predicts, Intel invests heavily in these markets, both through direct entry and through subsidy. We also find, again consistent with the literature, that the firm's entry decisions are shaped by the belief that it does not have either the capabilities or the resources to enter all possible markets, and thus that it believes it is critical to encourage widespread entry. As several authors have pointed out, this imperative places the firm in a difficult strategic position, since it needs to attempt to commit to potential entrants that it will not engage in an ex-post "squeeze", despite the fact that ex post it has very strong incentives to do so. We find that the fact that the complementary markets in which Intel competes are complex, dynamic and multilayered considerably sharpens this dilemma. We explore the ways in which Intel attempts to solve it, highlighting in particular the organizational structure and processes through which they attempt to commit to making money in the markets which they choose to enter while also committing not to making too much. Our results have implications for both our understanding of the dynamics of competition in complements and of the role of organizational structures and processes in shaping competition. |
| JEL: | L0 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11852&r=tid |
| By: | Frank G. van Oort; Erik Stam |
| Abstract: | Although there is growing evidence on the role of agglomeration economies in the formation and growth of firms, both the concepts of agglomeration economies and entrepreneurship tend to be ambiguously defined and measured in the literature. In this study, we aim to improve the conceptualisations and measures of agglomeration economies and entrepreneurship. Indicators of agglomeration economies are analysed in clearly defined urban regimes on three spatial scales in the Netherlands – national zoning, labour market connectedness, and urban size. This is done in order to uncover their effect on two entrepreneurial phases in the firm life cycle - new firm formation and the growth of incumbent firms in the relatively new ICT industry in the Netherlands. In comparison with new firm formation, the growth of incumbent firms is not so much related to spatial clustering of the ICT industry and other localized sources of knowledge economies associated with urban density. Instead, knowledge as an input for growth of incumbent firms is associated with more endogenous (firm internal) learning aspects, reflected by a significant correlate with R&D-investments. Also the effect of local ICT firm competition differs between the two types of firms: a positive effect on new firm formation, but a negative effect on incumbent firm growth. In general, agglomeration economies have stronger effects on the formation of ICT firms than on the growth of ICT firms. |
| Keywords: | agglomeration economics, spatial externalities, entrepreneurship, location, urban regimes, ICT industry |
| JEL: | D21 L25 L63 L86 M13 O18 R12 R30 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0508&r=tid |
| By: | Ron A. Boschma; Markku Sotarauta |
| Abstract: | In the last decade, the Finnish economy has shown an unprecedented recovery, after being hit by a deep crisis in the early 1990s. The paper views and interprets this successful transformation process based on ICT from an evolutionary perspective. Although the rapid pace of the restructuring of the Finnish economy suggests a break with the past, this remarkable recovery was firmly rooted in its economic history. In addition, Finnish public policy played its role in turning Finland into a knowledge economy. Although a master plan for the Finnish economy was lacking, many policies worked out quite well together over an extended period. Building on education, research and technology policy initiatives taken in the 1970s and 1980s, the deep economic crisis in the early 1990s paved the way for new policy directions, with a focus on network-facilitating innovation policies. |
| Keywords: | evolutionary economics, economic geography, innovation policy, Finnish economy, Finnish policy, ICT cluster |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0509&r=tid |
| By: | Ron A. Boschma; Rik Wenting |
| Abstract: | This paper aims to describe and explain the spatial evolution of the automobile sector in Great Britain from an evolutionary perspective. This analysis is based on a unique database of all entries and exits in this sector during the period 1895-1968, collected by the authors. Cox regressions show that spinoff dynamics, localization economies and time of entry have had a significant effect on the survival rate of automobile firms during the period 1895-1968. |
| Keywords: | evolutionary economics, automobile industry, entry, exit |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0504&r=tid |
| By: | V. Joseph Hotz; Mo Xiao |
| Abstract: | We examine the impact of minimum quality standards on the supply side of the child care market, using a unique panel data set merged from the Census of Services Industries, state regulation data, and administrative accreditation records from the National Association of Education for Young Children. We control for state-specific and time-specific fixed effects in order to mitigate the biases associated with policy endogeneity. We find that the effects of quality standards specifying the labor intensiveness of child care services are strikingly different from those specifying staff qualifications. Higher staff-child ratio requirements deter entry and reduce the number of operating child care establishments. This entry barrier appears to select establishments with better quality into the market and alleviates competition among existing establishments: existing establishments are more likely to receive accreditation and higher profits, and are less likely to exit. By contrast, higher staff-education requirements do not have entry-deterrence effects. They do have the unintended effects of discouraging accreditation, reducing owners' profits, and driving firms out of businesses. |
| JEL: | L5 L8 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11873&r=tid |
| By: | Gabriel Weintraub; C. Lanier Benkard; Ben Van Roy |
| Abstract: | We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an ``oblivious equilibrium,'' in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current information about competitors' states. We prove that, as the market becomes large, if the equilibrium distribution of firm states obeys a certain ``light-tail'' condition, then oblivious equilibria closely approximate Markov perfect equilibria. We develop bounds that can be computed to assess the accuracy of the approximation for any given applied problem. Through computational experiments, we find that the method often generates useful approximations for industries with hundreds of firms and in some cases even tens of firms. |
| JEL: | C63 C73 L11 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11900&r=tid |