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on Technology and Industrial Dynamics |
| By: | Iain M. Cockburn; Stefan Wagner |
| Abstract: | We examine the effect of patenting on the survival prospects of 356 internet-related firms that IPO'd at the height of the stock market bubble of the late 1990s. By March 2005, nearly 2/3 of these firms had delisted from the NASDAQ exchange. Although changes in the legal environment in the US in the 1990s made it much easier to obtain patents on software and, ultimately, on business methods, less than half of the firms in this sample obtained, or attempted to obtain, patents. For those that did, we hypothesize that patents conferred competitive advantages that translate into higher probability of survival, though they may also simply be a signal of firm quality. Controlling for age, venture-capital backing, financial characteristics, and stock market conditions, patenting is positively associated with survival. Quite different processes appear to govern exit via acquisition compared to exit via delisting from the exchange due to business failure. Firms that applied for more patents were less likely to be acquired, though obtaining unusually highly cited patents may make them more attractive acquisition target. These findings do not hold for business method patents, which do not appear to confer a survival advantage. |
| JEL: | L0 L26 L86 O34 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13146&r=tid |
| By: | Gerlach, Heiko (University of Auckland) |
| Abstract: | I examine the incentives of firms to communicate entry into an industry where the incumbent writes exclusionary, long-term contracts with consumers. The entrant's information provision affects the optimal contract proposal by the incumbent and leads to communication incentives that are highly non-linear in the size of the innovation. Entry with small and medium-to-large innovations is announced whereas small-to-medium and large innovations are not communicated. It is demonstrated that this equilibrium communication behavior maximizes ex ante total welfare by reducing the anti-competitive impact of excessively exclusive contracts. By contrast, consumers always prefer more communication and the incumbent's equilibrium contract maximizes ex ante consumer surplus. |
| Keywords: | Long-term contracts; communication; contractual switching costs; exclusionary conduct; |
| JEL: | D86 L12 L41 |
| Date: | 2007–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0697&r=tid |
| By: | Khazabi, Massoud |
| Abstract: | The paper proposes a theory of innovation and market structure. The model incorporates n firms with horizontal spillovers all interacting within a hypothetical industry. In a two-stage sequential game framework, four types of cooperation are studied: full non-cooperation; cooperation in both stages; cooperation only in the R&D stage; and simultaneous cooperation and non-cooperation in the R&D stage. It is shown that the effect of competition on total innovation investment varies among all four cases and mostly depends on the level of spillover. |
| Keywords: | R&D; Innovation; competition; cooperation; spillover; market structure |
| JEL: | L1 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3436&r=tid |
| By: | Luís Cabral (New York University) |
| Abstract: | I consider a dynamic model of competition between two proprietary networks. Consumers die with a constant hazard rate and are replaced by new consumers. Firms compete for new consumers to join their network by offering network entry prices (which may be below cost). New consumers have a privately known preference for each network. Upon joining a network, in each period consumers enjoy a benefit which is increasing in network size during that period. Firms receive revenues from new consumers as well as from consumers already belonging to their network. I discuss various properties of the equilibrium, including the pricing function, the system’s expected motion, and the stationary distribution of market shares. I derive several results analytically. I then confirm and extend these results by numerical computation. Finally, I use the model to estimate the barrier to entry create by network effects. |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:pca:wpaper:22&r=tid |
| By: | Sandra Phlippen (Erasmus Universiteit Rotterdam); Massimo Riccaboni (University of Florida) |
| Abstract: | This paper examines how a radical technological innovation affects alliance formation of firms and subsequent network structures. We use longitudinal data of interfirm R&D collaborations in the biopharmaceutical industry in which a new technological regime is established. Our findings suggest that it requires radical technological change for firms to leave their embedded path of existing alliances and form new alliances with new partners. While new partners are mostly found through the firms’ existing network, we provide some insight into distant link formation with unknown partners, which contributes to our understanding of how ‘small-worlds’ might emerge. |
| Keywords: | Pharmaceutical industry; Biotechnology industry; R&D; Technological change; Alliances; Networks |
| JEL: | O32 O31 L14 L24 M13 M21 |
| Date: | 2007–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070039&r=tid |
| By: | Jan K. Brueckner (Department of Economics, University of California-Irvine); Vivek Pai (Department of Economics, University of California-Irvine) |
| Abstract: | This paper explores the impact of the regional jet (RJ), an important new technological innovation in the airline industry, on service patterns and service quality. The evidence shows that RJs were used to provide service on a large number of new hub-and-spoke (HS) and point-to-point (PP) routes. In addition, they replaced discontinued jet and turboprop service on many HS routes, as well as supplementing continuing jet service on such routes. When replacement or supplementation by RJs occurred, passengers benefited from better service quality via higher flight frequencies. The paper's theoretical analysis predicts that the frequency advantage of RJs over jets, a consequence of their small size, should have led to the emergence of PP service in thin markets where such service was previously uneconomical. However, the evidence contradicts this prediction, showing that markets attracting new PP service by RJs had demographic characteristics similar to those of markets that already had jet PP service or attracted it after 1996. |
| Keywords: | Regional jet; Airlines; Network |
| JEL: | L93 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:060720&r=tid |
| By: | Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin)); Viktor Slavtchev (University of Jena, School of Busniess and Economics) |
| Abstract: | Innovation processes are characterized by a pronounced division of labor between actors. Two types of externality may arise from such interactions. On the one hand, a close location of actors affiliated to the same industry may stimulate innovation (MAR externalities). On the other hand, new ideas may be born by the exchange of heterogeneous and complementary knowledge between actors, which belong to different industries (Jacobs' externalities). We test the impact of both MAR as well as Jacobs' externalities on innovative performance at the regional level. The results suggest an inverted u-shaped relationship between regional specialization in certain industries and innovative performance. Further key determinants of the regional innovative performance are private sector R&D and university-industry collaboration. |
| Keywords: | Innovation, technical efficiency, patents, agglomeration concentration, specialization, diversity, regional analysis. |
| JEL: | O31 O18 R12 |
| Date: | 2007–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-018&r=tid |
| By: | Cassiman, Bruno (IESE Business School); Golovko, Elena (IESE Business School) |
| Abstract: | In this paper, we explore the relationship between innovation activity, productivity, and exports, using a panel of Spanish manufacturing firms for 1990-1998. Our results -based on non-parametric tests- suggest that firm innovation status is critical in explaining the positive export-productivity association documented in prior research. For the sample of small innovating firms, we find no significant differences in productivity levels between exporters and non-exporters. Especially product innovation seems to explain this positive association between exports and productivity. For small non-innovating firms with the low and medium productivity levels, however, exporting firms continue to exhibit higher productivity than non-exporting firms. |
| Keywords: | Innovation; productivity; exports; industry dynamics; |
| Date: | 2007–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0688&r=tid |
| By: | Alberth, S. |
| Abstract: | To further our understanding of the effectiveness of learning or experience curves to forecast technology costs, a statistical analysis using historical data has been carried out. Three hypotheses have been tested using available data sets that together shed light on the ability of experience curves to forecast future technology costs. The results indicate that the Single Factor Learning Curve is a highly effective estimator of future costs with little bias when errors were viewed in their log format. However it was also found that due to the convexity of the log curve an overestimation of potential cost reductions arises when returned to their monetary units. Furthermore the effectiveness of increasing weights for more recent data was tested using Weighted Least Squares with exponentially increasing weights. This resulted in forecasts that were typically less biased than when using Ordinary Least Square and highlighted the potential benefits of this method. |
| Keywords: | Forecasting, Learning curves, Renewable energy |
| JEL: | D81 O30 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0710&r=tid |
| By: | A. Coad |
| Abstract: | We survey the phenomenon of the growth of firms drawing on literature from economics, management, and sociology. We begin with a review of empirical ‘stylised facts’ before discussing theoretical contributions. Firm growth is characterized by a predominant stochastic element, making it difficult to predict. Indeed, previous empirical research into the determinants of firm growth has had a limited success. We also observe that theoretical propositions concerning the growth of firms are often amiss. We conclude that progress in this area requires solid empirical work, perhaps making use of novel statistical techniques. |
| Keywords: | Firm Growth, Size Distribution, Growth Rates Distribution, Gibrat’s Law, Theory of the Firm, Diversification, ‘Stages of Growth’ models Length 73 pages |
| JEL: | L11 L25 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2007-03&r=tid |