nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2008‒06‒07
six papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Competition and Innovation: An Experimental Investigation By Dario Sacco; Armin Schmutzler
  2. Monopolistic Competition, International Trade and Firm Heterogeneity - a Life Cycle Perspective By Hansen, Jørgen Drud; Kvedaras, Virmantas; Nielsen, Jørgen Ulff-Møller
  3. Defensive strategies in the quality ladders By Ivan Ledezma
  4. FDI and the Consequences: Towards more complete capture of spillover effects By Ken Schoors; Bruno Merlevede
  5. Firm Concentration,Technology Promotion and Economic Performance:An Empirical Study on the Nature and Dynamics of Industrial Clusters in China’s Development Zones along the Down Reaches of Yangtze River By ZHENG , Jianghuai; GAO, Yanyan; Hu, Xiaowen
  6. On Factors explaining Organizational Innovation and its Effects By Koson Sapprasert

  1. By: Dario Sacco (Socioeconomic Institute, University of Zurich); Armin Schmutzler (Socioeconomic Institute, University of Zurich)
    Abstract: The paper analyzes the effects of more intense competition on firms’ incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case.
    Keywords: R&D investment, intensity of competition, experiment
    JEL: C92 L13 O31
    Date: 2008–05
  2. By: Hansen, Jørgen Drud (Department of Economics, Aarhus School of Business); Kvedaras, Virmantas (Department of Econometric Analysis); Nielsen, Jørgen Ulff-Møller (Department of Economics, Aarhus School of Business)
    Abstract: This paper presents a dynamic international trade model based on monopolistic competition, where observed intra-industry differences at a given point in time reflect different stages of the firm’s life cycle. New product varieties of still higher quality enter the market every period rendering old varieties obsolescent in a process of creative destruction. For given technology (variety) production costs decrease after an infant period due to learning. It is shown that several patterns of exports may arise depending primarily on the size of fixed trade costs. At a given point in time firms therefore differ due to different age, although all firms are symmetric in a life cycle perspective. The paper thus offers an alternative view on firm heterogeneity compared with other recent papers, where productivity differences appear as an outcome of a stochastic process.
    Keywords: Product innovations; learning; creative destruction; firm heterogeneity; export performance
    JEL: F12 F13
    Date: 2008–05–01
  3. By: Ivan Ledezma
    Abstract: This paper studies theoretically and empirically the consequences of defensive strategies in R&D races. Using a quality ladders model we allow for endogeneous incumbent R&D advantages explained by strategies seeking to limit knowledge diffusion. Market institutions appear to be crucial to foster aggregate R&D intensity and to determine who innovates. Regulatory provisions reducing the possibilites of defensive strategies in the process of production may indeed increase the incentives to carry out R&D. This effect is more likely to be observed when the size of innovation is high. Using time-series cross-section data of manufacturing industries among 17 OECD countries we test the relationship between regulation and R&D expenditure over value added. We allow for a differentiated effect of regulation for industries producing and using ICT. The evidence is consistent with the model's predictions.
    Date: 2008
  4. By: Ken Schoors; Bruno Merlevede
    Abstract: We analyze productivity spillovers of FDI on domestic companies, both within and across industries. In the identification of intraindustry spillovers, we separate out labor market effects from other effects. Interindustry spillovers are identified through upstream, downstream, and supply-backward linkage effects. Dynamic input output tables are used to construct the linkages. For a panel of Romanian firms, we find evidence that labor market effects differ from other intraindustry effects. Spillovers across industries dominate those within industries. The supply-backward effect behaves as predicted by theory. Firm-specific level of technology, firm size, and ownership structure are all found to affect spillovers.
    Keywords: FDI, spillovers, absorptive capability, firm size, ownership structure
    JEL: F2
    Date: 2007–08–01
  5. By: ZHENG , Jianghuai; GAO, Yanyan; Hu, Xiaowen
    Abstract: Based on micro-firm data of development zones in Jiangsu Province along the Yangtze River, the effects of local factors special to development zones and of technology promotion on firm’s performance are tested, from which we try to illustrate the nature and dynamics of industrial clusters built on development zones. The results show that the primary reasons firms locate into development zones are not clustering benefits in general meaning brought by interactions among firms locally concentrated, but are the attraction of “policy rents” and the scale economy of infrastructure brought by government behaviors. Once located in the zone, the firm is doom to interact with local government as well as industry-related factors, and the clustering effects may emerge. Thus, the key to keep development zones’ competition sustainable, when governments’ bidding wars and policy adjustment fade away “policy rents” and scale economy of infrastructure, is to cultivate clustering effects.
    Keywords: Development Zones along Yangtze River; Firms’ Spatial Concentration; Industrial Clustering Effects; Technology Promotion; Policy Rents
    JEL: R53 R58 R30 R50 O53
    Date: 2008–02
  6. By: Koson Sapprasert (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: This paper shows how the probability of attempts at organizational innovation and its effects can be explained by firm age and size and other determinants. The integrated firm-level dataset obtained from the latest two Norwegian Community Innovation Surveys (CIS3 & 4) and annual accounts is used to investigate these complex relationships. The analysis employing Heckman two-step estimation to correct potential sample selection bias demonstrates that firm age and size have different impacts on the firm’s decision to undertake organizational innovation and on the effects of such innovation on firm performance. Older and larger firms are found to be more inclined to make an attempt at organizational change; while, concerning the outcome, smaller firms are more able to benefit from such an attempt. The results further reveal that different types of organizational change do foster firm performance where even greater effects can be led by persistence of organizational innovation as well as complementarity of organizational and technological innovation. In addition, it is evidence that past economic performance and high costs of innovation influence the firm’s decision to pursue organizational change.
    Keywords: Organizational Innovation, Age & Size, Structural Inertia, Firm Performance, Complementarity, Persistence.
    JEL: L25 O21 O39
    Date: 2008–06

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