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on Technology and Industrial Dynamics |
| By: | Uwe Cantner (Friedrich-Schiller-University, Jena, Department of Economics, Chair of Economics); Tatiana Plotnikova (Friedrich-Schiller-University, Jena, GSBC-EIC The Economics of Innovative Change) |
| Abstract: | This paper deals with the topic of related R&D and innovation strategies of large firms. We ask what determines the diversity of a firm's product portfolio. More specifically, we try to explain large firms' expansion into new product markets driven by the characteristics of their technological knowledge. Empirically, we study firms in the pharmaceutical and biotech industries, using relevant data on product development and technological knowledge. We find a positive relationship between the diversity of a firm's future product portfolio and the diversity of its stock of technological knowledge. This relationship becomes weaker when the breadth of technological knowledge increases. |
| Keywords: | Product diversity, technological diversity, product relatedness, technological relatedness, coherence |
| JEL: | O32 L25 L65 |
| Date: | 2009–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-031&r=tid |
| By: | Andrew Burke; Aoife Hanley |
| Abstract: | We propose that the effect of market concentration on firm survival is different according to whether an industry is static (low entry and exit) or dynamic. In our empirical analysis we find support for this hypothesis. Industry concentration rates reduce the survival of new plants but only in markets marked by low entry and exit rates. Specifically, a 10 percent increase in the 5-firm concentration ratio in a dynamic market raises the survival rate of new ventures by approximately 2 percent. Our results have implications for the antitrust/competition law indicating less need for regulation of dominant firms in dynamic industries characterized by high entry and exit rates. We use a unique dataset comprising the population of new ventures that enter the UK market in 1998 |
| Keywords: | new firms, start-ups, survival, dynamism, competition policy, industry concentration |
| JEL: | L11 L25 M13 M40 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1517&r=tid |
| By: | Tetsugen Haruyama (Graduate School of Economics, Kobe University) |
| Abstract: | R&D-based models of endogenous technical progress rest on a premise that technical progress is driven by profit-seeking entrepreneurs. This literature led to a dominant view that endogenous technical advance is not consistent with perfect competition with constant returns to scale. Departing from this dominant perspective, we demonstrate that technical progress endogenously occurs in a perfectly competitive economy under constant returns to scale in rivalrous inputs. Our result is based on a hypothesis that R&D creates codified and tacit knowledge as joint products. Empirical and case studies are discussed to support the hypothesis. Using the model, we demonstrate that stronger patent protection can encourage or discourage R&D, depending on the size of an economy. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:0905&r=tid |
| By: | Michele Boldrin; David K Levine |
| Date: | 2009–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:814577000000000211&r=tid |
| By: | Viktoria Kocsis; Ruslan Lukach; Bert Minne; Victoria Shestalova; Nick Zubanov; Henry van der Wiel |
| Abstract: | This document provides a review of recent theoretical and empirical literature on the relationship between entry, exit and productivity. Decomposition methods show that entry and exit considerably contribute to productivity growth, but are unable to shed any light on the ultimate sources of productivity growth. However, the theories discussed do provide options for effective policy instruments. We argue that productivity or welfare should be the aim of policy and not the number of entrants, the intensity of competition or the amount of innovation expenditures. Taking a welfare approach, we address market failures with respect to entry. The most eminent market failure is market power of dominant incumbents. Lowering institutional entry barriers economy-wide is a promising policy option for further consideration. Whether such a policy measure actually improves social welfare depends also on the extent of other failures. Therefore, an ex ante cost-benefit analysis needs to precede intervention. |
| Keywords: | entry; exit; productivity |
| JEL: | B41 O30 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:180&r=tid |