|
on Technology and Industrial Dynamics |
| By: | Cerquera Dussán, Daniel |
| Abstract: | We develop a model of R&D competition between an incumbent and a potential entrant with network externalities and durable goods. We show that the threat of entry eliminates the commitment problem that an incumbent may face in its R&D decision due to the goods’ durability. Moreover, a potential entrant over-invests in R&D and an established incumbent might exhibit higher, equal or lower R&D investments in comparison with the social optimum. In our model, the incumbent’s commitment problem and the efficiency of its R&D level are determined by the extent of the network externalities. |
| Keywords: | Network externalities, Durable Goods, Innovation, Imperfect Competition |
| JEL: | D21 D85 L13 O31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7010&r=tid |
| By: | Antonelli Cristiano (University of Turin); Pierpaolo Patrucco (University of Turin); Quatraro Francesco (University of Turin) |
| Abstract: | This paper articulates the hypothesis that there is an optimal size of knowledge pools. Too little a density of innovation activities reduces the accessibility of external knowledge. Too large a density enhances congestion and reduces appropriability. Firms can benefit from actual increasing returns stemming from the indivisibility, replicability and non-exhaustibility of knowledge only when the size of innovation networks is comprised between the two extremes. The empirical evidence confirms that the output elasticity of knowledge, included in a typical Griliches production function, is itself a quadratic function of the size of innovation networks. Knowledge externalities do trigger increasing returns that are external to each firm, only within a well defined interval. Knowledge externalities are a property of the system into which firms are embedded. As such they are endogenous to the system and likely to exhibit specific properties related to the changing characteristics of the system itself. The quality of knowledge governance mechanisms in place plays a key role in assessing the actual size of the net positive effects of knowledge externalities. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:200801&r=tid |
| By: | Binz, Hanna L.; Czarnitzki, Dirk |
| Abstract: | We analyze financial constraints for R&D, where we account for heterogeneity among investments which has been neglected in previous literature. According to economic theory, investments should be distinguished by their degree of uncertainty, e.g. routine R&D versus cutting-edge R&D. Financial constraints should be more binding for cutting-edge R&D than for routine R&D. Using panel data we find that R&D spending of firms devoting a significant fraction of R&D to cutting-edge projects is curtailed by credit constraints while routine R&D investments are not. This has important policy implications with respect to the distribution of R&D subsidies in the economy. |
| Keywords: | R&D, Financial Constraints, Panel Data |
| JEL: | O31 O32 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7016&r=tid |
| By: | KV, Bhanu Murthy; Deb, Ashis Taru |
| Abstract: | Concepts evolve through time and over time they assume different meanings. The concept of competition is no exception. This paper discusses the evolution of the concept of competition in general with a view to derive a theoretical framework for analyzing competition in banking industry. Starting from the classical notions of competition it proceeds to some of the latest approaches (Northcott (2004), Neuberger (1998), Toolsema (2003), Bolt and Tieman (2001)). The ordinary Structure-Conduct-Performance approach does not involve any analysis of market dynamics. Our approach introduces various aspects of industry dynamics and growth. It provides a methodology to arrive at the market form in banking industry through an analysis of all the aspects of basic conditions, structure, conduct and performance. It is argued that sustained growth and dynamics of the industry is not price led. Growth arises out of changing basic conditions and dynamics arises out of sharing the new market created by basic conditions. Hence the prime mover of competition is rivalry among firms to control market share and to internalize externalities rather than adjustments brought about by the price mechanism. |
| Keywords: | Structure-Conduct-Performance;Competition theory;Banking competition;Basic Conditions;Entry facilitator. |
| JEL: | D21 B19 E58 D41 D40 B29 D49 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:7465&r=tid |
| By: | KV, BHANU MURTHY; Deb, Ashis Taru |
| Abstract: | Using an appropriate theoretical framework and econometric methodology, the study has sought to measure and model competition in private banking industry in India in an attempt to analyse the process of market dynamics in the industry. The changing scenario of private banking consequent to deregulation provided the motivation behind the study. It used the concept of competition proposed by Stigler (1961) and measured it by Bodenhorn’s (1990) measure of mobility. The study provides a critique of the mechanism of inducing competition, which is implicit in the Narasimham Committee (1991). It then provides the theoretical background of an alternative mechanism based on Structure-Conduct-Performance paradigm, which incorporates basic conditions and strategic groups, apart from including entry, economies of scale, product differentiation and price cost margin, One basic contention of the study is that competition goes beyond “conduct” and encompasses all the four components of S-C-P paradigm: basic conditions, structure, conduct and performance. Accordingly, a three equation simultaneous equation model is used to ultimately estimate the equation of competition through Tobit technique. The result demonstrates that variables related to basic conditions, structure, and conduct and performance influence competition. The study has found evidence against the simplistic relationship between concentration and competition, which remained implicit in the literature. The study also developed a methodology to arrive at market form from an analysis of three aspects of a market and concludes that private banking industry in India is characterized by monopolistic competition. |
| Keywords: | Competition;Structure-Conduct-Performance;Banking reform;Tobit model. |
| JEL: | D21 E58 D41 D40 C25 D49 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:7463&r=tid |
| By: | Massimiliano Mazzanti; Giulio Cainelli (University of Bari and CERIS-CNR); Roberto Zoboli (Catholic University of Milan and CERIS-CNR) |
| Abstract: | This paper aims at analysing the role of the environment in innovative strategies based on firm economic performance indicators such as employment, turnover, and labour productivity growth. We exploit a unique dataset of 773 Italian service firms with 20 or more employees comprising 1993-1995 CIS II data on firm innovation strategic motivations and 1995-1998 data on employment, turnover, and labour productivity from the System of the Enterprise Account (SEA). We specify a Gibrat-like empirical model in which the covariates include firm strategies (innovation and environmental), and a set of other explanatory variables and controls. Our econometric findings show a negative link between environmental motivations and growth in employment and turnover and a consequent not significant effect on labour productivity growth. The effect on employment is partly in line with past evidence and may derive from efficiency improvements (dematerialization processes) which also impact on efficiency by reducing workforce number. It is plausible that the net effect derives from the absence of low skilled employment and a creation of high skilled jobs, as a consequence of increased environmental awareness. The effect on turnover shows a negative impact from environmental innovation strategy, implying either a short-medium effect, possibly balanced in the long run by net benefits in terms of higher added value, or a real negative impact, which may be contingent on the observed period, when environmental strategies where not at the heart of strategic management policies. However, productivity-related effects (the core of performance indicators) are not significant. Mainstream hypotheses related to eventual negative impacts are thus not confirmed, although Porter-like effects and virtuous circles between environmentally strategies and performance do not seem to be present. |
| Keywords: | Services, Firm Environmental Strategies, Firm Growth, CIS Survey, Innovation |
| JEL: | C23 D21 O32 Q55 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.104&r=tid |