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on Technology and Industrial Dynamics |
| By: | Uwe Cantner (University of Jena, School of Busniess and Economics); Werner Güth (Max Planck Institute of Economics Jena, Strategic Interaction Unit); Andreas Nicklisch (Max Planck Institute for Research on Collective Goods, Bonn, Germany); Torsten Weiland (Max Planck Institute of Economics Jena, Strategic Interaction Unit) |
| Abstract: | We experimentally investigate competition in innovation in a patent race scenario. Pairs of subjects compete as seller firms on a duopoly market, engaging in risky search investments. Successful innovation is rewarded through temporary monopoly rents. Throughout the interaction, subjects receive feedback on own and other’s search success and profit margin. Partitioning subjects into subgroups of investor types reveals that the majority of subjects condition investments on the degree of competition as measured by sales shares, while for others no correlation is ascertained. Heterogeneity in individual risk attitudes and differing experiences with related search tasks may explain this finding. |
| Keywords: | innovation, competition, imitation, patent race |
| JEL: | D81 L11 O31 |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-014&r=tid |
| By: | Nick Bloom; Mark Schankerman; John Van Reenen |
| Abstract: | Support for R&D subsidies relies on empirical evidence that R&D "spills over" between firms. But firm performance is affected by two countervailing R&D spillovers: positive effects from technology spillovers and negative business stealing effects from R&D by product market rivals. We develop a general framework showing that technology and product market spillovers have testable implications for a range of performance indicators, and then exploit these using distinct measures of a firm's position in technology space and product market space. Using panel data on U.S. firms between 1980 and 2001 we show that both technology and product market spillovers operate, but technology spillovers quantitatively dominate. The spillover effects are also present when we analyze three high tech sectors in finer detail. Using the model we evaluate the net spillovers from three alternative R&D subsidy policies. |
| JEL: | F23 L1 O31 O32 O33 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13060&r=tid |
| By: | Luís Cabral (New York University); Thomas Ross (University of British Columbia) |
| Abstract: | The received wisdom is that sunk costs create a barrier to entry— if entry fails, then the entrant, unable to recover sunk costs, incurs greater losses. In a strategic context where an incumbent may prey on the entrant, sunk entry costs have a countervailing effect: they may effectively commit the entrant to stay in the market. By providing the entrant with commitment power, sunk investments may soften the reactions of incumbents. The net effect may imply that entry is more profitable when sunk costs are greater. |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pca:wpaper:19&r=tid |
| By: | Koen Frenken; Ron A. Boschma |
| Abstract: | We propose a framework that specifies the process of economic development as an evolutionary branching process of product innovations. Each product innovation provides a growth opportunity for an existing firm or a new firm, and for an existing city or a new city. One can then obtain both firm size and city size distributions as two aggregates resulting from a single evolutionary process. Gains from variety at the firm level (economies of scope) and the urban level (Jacobs externalities) provide the central feedback mechanism in economic development generating strong path dependencies in the spatial concentration of industries and the specialisation of cities. Gains from size are also expected, yet these are ultimately bounded by increasing wages. The contribution of our framework lies in providing a micro-foundation of economic geography in terms of the interplay between industrial dynamics and urban growth. The framework is sufficiently general to investigate systematically a number of stylised facts in economic geography, while at the same time it is sufficiently flexible to be extended such as to become applicable in more specific micro-contexts. A number of extensions related to the concepts of knowledge spillover and lock-in, are also discussed. |
| Keywords: | evolutionary economic geography, urban growth, firm growth, Zipf, branching, innovation |
| JEL: | B25 B52 L11 L25 R0 R1 R12 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0701&r=tid |
| By: | Glenn Ellison; Sara Fisher Ellison |
| Abstract: | This paper develops a new approach to testing for strategic entry deterrence and applies it to the behavior of pharmaceutical incumbents just before they lose patent protection. The approach involves looking at a cross-section of markets and examining whether behavior is nonmonotonic in the size of the market. Under certain conditions, investment levels will be monotone in market size if firms are not influenced by a desire to deter entry. Strategic investments, however, may be nonmonotone because entry deterrence is unnecessary in very small markets and impossible in very large ones, resulting in overall nonmonotonic investment. The pharmaceutical data contain advertising, product proliferation, and pricing information for a sample of drugs which lost patent protection between 1986 and 1992. Among the findings consistent with an entry deterrence motivation are that incumbents in markets of intermediate size have lower levels of advertising and are more likely to reduce advertising immediately prior to patent expiration. |
| JEL: | L13 L65 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13069&r=tid |
| By: | Rajneesh Narula; Grazia D. Santangelo |
| Abstract: | This paper shows empirically that in an intra-industry oligopolistic scenario the location of a firm’s innovative activities plays an important role in determining its partner selection in R&D alliances. Such a role is mainly attributed to a strategic use of R&D alliances as a means to limit knowledge flows and protect competences, rather than to promote knowledge flows. By drawing on a novel dataset matching alliances and patent data for the European ICT industry, the econometric analysis shows that partners’ prior co-location (at both national and sub-national regional level), previous ties and technological overlap matter in the choice of partner, while common nationality has a negative impact on alliance formation. |
| Keywords: | Alliances; strategy; efficiency; R&D location |
| JEL: | D23 F23 O18 O32 R3 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:07-05&r=tid |
| By: | Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | In this paper, we examine the relationship between R&D collaboration, corporate ownership, market orientation and innovation. In doing so, we classify a Swedish sample of 1,249 multinational enterprises, MNEs, on the basis of their main market, corporate ownership structure and whether their collaborators are foreign-owned or not. We then apply a knowledge production model and estimate the contribution to innovation output from regional and foreign collaboration on innovation with other firms within the group, universities, suppliers and customers, competitors and consultants, controlling for internal R&D investment, human capital, physical capital, trade, financial resources and industry classification. Empirical evidence based on cross-sectional data sheds new light on how innovation is affected by local and global technology spillover. |
| Keywords: | Multinational enterprises; R&D; R&D collaboration; spillovers; export; import; corporate ownership structure; community innovation survey; innovation output; micro econometrics |
| JEL: | D21 F23 L21 L22 O31 O32 |
| Date: | 2007–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0090&r=tid |
| By: | Llanto, Gilberto M.; Laviña, Gabrielle Roanne |
| Abstract: | <br>The paper reviews the innovations developed by some financial institutions to meet the challenges of microfinance and rural finance markets. Innovations could be new products and methodologies or refinements to existing practices that are created in response to market inefficiencies and changing demands of a target clientele. Essentially, innovations by financial institutions are not only a means to reach the large unserved poor households but also to provide more and better products and services that could contribute to increasing profitability of the institutions adopting them.</br> <br>The first type is innovations on the financial system which refers to changes in the structure of the financial sector particularly in the legal and regulatory framework. The second type of innovation is institutional innovation which deals with the changes in the structure, organization, and legal form of the institution. Another type of innovation is the process innovation. This refers to the introduction of new business processes leading to increased efficiency or market expansion (most often associated with technological progress). The last type of innovations is products innovation which refers to the introduction of new or modified products or services tailored to the needs of the rural borrowers.</br> |
| Keywords: | microfinance, rural finance, innovation, institutional innovation, products innovation, process innovation, systemic level of innovation, scarcity of collateral, leasing |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2006-24&r=tid |
| By: | Ulrich Witt (Max Planck Institute of Economics Jena, Evolutionary Economics Unit); Tom Brökel (Max Planck Institute of Economics Jena, Evolutionary Economics Unit); Thomas Brenner (Max Planck Institute of Economics Jena, Evolutionary Economics Unit) |
| Abstract: | This paper discusses several features of knowledge that are often considered crucial for characterizing the economic significance of knowledge: whether it is overtly accessible or tacit, whether it can be or is encoded or not, and whether it has public or private good character. It is argued that all these features depend similarly on the state of the knowledge technology, i.e. on how knowledge can be acquired, stored, used, and communicated. The different characteristics and the relationships between them are shown to correspond to different specifications of the technology, specifications that are not always made explicit in the literature. |
| Keywords: | knowledge, knowledge technology, tacitness, ouvertness, public goods, intellectual property rights |
| JEL: | O31 O34 |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-013&r=tid |