nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2008‒03‒15
six papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Monopoly, Diversification through Adjacent Technologies, and Market Structure By Karaaslan, Mehmet E.
  2. Industry Size and the Distribution of R&D Investment By John Asker; Mariagiovanna Baccara
  3. Knowledge Spillovers, Competition, and R&D Incentive Contracts By N. Lacetera; L. Zirulia
  4. Evaluating the Impact of Technology Development Funds in Emerging Economies: Evidence from Latin America By Bronwyn H. Hall; Alessandro Maffioli
  5. Technology Flows between Sectors and its Impact on Large-Scale Firms By Jürgen Antony; Thomas Grebel
  6. R&D and Productivity: Testing Sectoral Peculiarities Using Micro Data By Potters, Lesley; Ortega-Argilés, Raquel; Vivarelli, Marco

  1. By: Karaaslan, Mehmet E.
    Abstract: The theoretical literature on technological competition has been mostly concerned with various aspects of innovative activity in a single market. By contrast, this paper studies the adoption of a sequence of product innovations in two markets characterized by a common technology base, and illustrates the effects of technological rivalry and preemption. Under a perfect information scenario, it is shown in a two incumbent model that if the innovation is drastic (total replacement of the old product), under certain conditions the fear of being preempted by the entrant forces the firms to diversify their product lines by adopting the innovations across each other's markets. On the other hand, with non-drastic innovation (partial replacement of the old product), it is more likely for the firms to diversify in their own product lines. Out of a class of equilibria characterized under non-drastic innovation, one is optimal in which innovations are adopted in the firms' own markets. In the Pareto inferior equilibria, the firms either adopt innovations in each other's market so that incumbency changes hands or jointly adopt both innovations in two separate product lines. Perfect Bayesian equilibria are characterized under an asymmetric information scenario where one of the firms is assumed to have complete information about the relevant costs of adopting an innovation in a separate product line. If the priors are based on pessimism, it is more often subject to exploitation by the informed firm leading to pooling equilibrium, while optimistism more often leads to diversification and to a competitive market structure in both product lines under a separating equilibrium. In all the cases considered, both innovations are adopted, and in most cases they are adopted by the high cost entrant. The former is socially desirable, but the latter is not. More competitiveness necessarily implies wasteful expenditure by the high cost firm. Lack of competitiveness and technological rivalry, on the other hand, imply that maximum product diversity may not be achieved.
    Keywords: tehnological rivalry; preemption; adoption of innovations; upgrading
    JEL: L10 O31
    Date: 2007–10–01
  2. By: John Asker; Mariagiovanna Baccara
    Date: 2008
  3. By: N. Lacetera; L. Zirulia
    Date: 2008–01
  4. By: Bronwyn H. Hall; Alessandro Maffioli
    Abstract: Evaluations of government Technology Development Funds (TDF) in Argentina, Brazil, Chile and Panama are surveyed. All the evaluations were done at the recipient (firm) level using data from innovation surveys, industrial surveys, and administrative records of the granting units, together with quasi-experimental econometric techniques to minimize the effects of any selection bias. TDF effectiveness is found to depend on the financing mechanism used, on the presence of non-financial constraints, on firm-university interaction, and on the characteristics of the target beneficiaries. Four levels of potential impact were considered: R&D input additionality, behavioural additionality, increases in innovative output, and improvements in performance. The evidence suggests that TDF do not crowd out private investment and that they positively affect R&D intensity. In addition, participation in TDF induces a more proactive attitude of beneficiary firms towards innovation activities. However, the analysis does not find much statistically significant impact on patents or new product sales and the evidence on firm performance is mixed, with positive results in terms of firm growth, but little corresponding positive impact on measures of firm productivity, possibly because the horizon over which the evaluation was conducted was too short.
    JEL: O32 O38
    Date: 2008–03
  5. By: Jürgen Antony (Economics Department, University of Augsburg); Thomas Grebel (Economics Department, University of Jena)
    Abstract: In this paper we highlight the importance of technology flows between sectors and their impact on the labor productivity of large-scale corporations. Based on theoretical considerations, we explore technological spillovers between the sectors of an economy. Large-scale corporations usually focus on certain sectors but make use of a wide range of technological knowledge from other sectors. Thereby, technological knowledge built up in sectors by continuous R+D activities does not spill over without bounds but is directed by ?rms' absorptive capacities. We use ?rms' patent portfolio to empirically calculate the sector affiliation and therewith the ?rms' absorptive capacities in order to estimate the impact of technology diffusion on labor productivity. Fortune 500 ?rms serve as data base.
    Keywords: Technology Flows, Spillovers, Firm Productivity
    JEL: O33 O14
    Date: 2008–03–07
  6. By: Potters, Lesley (Utrecht School of Economics); Ortega-Argilés, Raquel (European Commission); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: The aim of this study is to investigate the relationship between a firm's R&D activities and its productivity using a unique micro data panel dataset and looking at sectoral peculiarities which may emerge; more specifically, we used an unbalanced longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. Our main findings can be summarised along the following lines: knowledge stock has a significant positive impact on a firm's productivity, with an overall elasticity of about 0.125; this general result is largely consistent with previous literature in terms of the sign, the significance and the estimated magnitude of the relevant coefficient. More interestingly, the coefficient increases monotonically when we move from the low-tech to the medium-high and high-tech sectors, ranging from a minimum of 0.05/0.07 to a maximum of 0.16/0.18. This outcome, in contrast with recently-renewed acceptance of low-tech sectors as a preferred target of R&D investment, suggests that firms in high-tech sectors are still far ahead in terms of the impact on productivity of their R&D investments, at least as regards top European R&D investors.
    Keywords: panel data, R&D, productivity, knowledge stock, perpetual inventory method
    JEL: O33
    Date: 2008–02

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