nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2009‒07‒11
five papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Competition and Innovation: Evidence from Financial Services By Jaap W.B. Bos; Ryan C.R. van Lamoen; James W. Kolari
  2. Regional Dynamics of Innovation Investigating the Co-Evolution of Patents, R&D, and Employment By Matthias Bürger; Tom Brökel; Alex Coad
  3. Industry Equilibrium with Open Source and Proprietary Firms By Gastón Llanes; Ramiro de Elejalde
  4. Superstars and the Long Tail: The impact of technology on market structure in media industries By Helen Weeds
  5. Innovation, Tangible and Intangible Investments and the Value of Spanish Firms By Aitor Lacuesta; Omar Licandro; Teresa Molina; Luis A. Puch

  1. By: Jaap W.B. Bos; Ryan C.R. van Lamoen; James W. Kolari
    Abstract: In this paper we seek to contribute to the literature on competition and innovation by focusing on individual firms within the U.S. banking industry in the period 1984-2004. We measure innovation by estimating technology gaps and find evidence of an inverted-U relationship between competition and the technology gaps in banking. This finding is robust over several different specifications and is consistent with theoretical and empirical work by Aghion, Bloom, Blundell, Griffith, and Howitt (2005b). The optimal amount of innovation requires a slightly positive mark up. Also, we find that the U.S. banking industry as a whole has consolidated beyond this optimal innovation level and that state-level interstate banking deregulation has lowered innovation.
    Keywords: competition, innovation, stochastic frontier analysis, technology gap ratio, banking
    JEL: D21 G21 L10 O30
    Date: 2009–06
  2. By: Matthias Bürger (Friedrich-Schiller-University Jena, RTG 1411 - The Economics of Innovative Change); Tom Brökel (Utrecht University, Urban and Regional Research Centre Utrecht (URU)); Alex Coad (Max Planck Institute of Economics, Jena; Centre d'Economie de la Sorbonne, Univ. Paris 1)
    Abstract: We investigate the lead-lag relationship between growth of patent applications, growth of R&D, and growth of total sectoral employment for 270 German labour market regions over the period 1999-2005. Our unique panel dataset includes information on four two-digit industries, namely Chemistry, Transport equipment, Medical & Optical Equipment as well as Electrics & Electronics. The results obtained from a vector autoregression model show that an increased innovative activity is associated with subsequent growth of employment in the Medical & Optical Equipment industry as well as in the Electrics & Electronics sector. With respect to the latter growth of patent applications is also associated with subsequent growth of R&D employees indicating either a "success-breeds-success" story or benefits due to agglomeration economies at the level of the region. However we do not find those effects for the other industries due to their idiosyncratic innovation and patenting behaviour.
    Keywords: Innovation, Agglomeration, Employment
    JEL: O18 R11
    Date: 2009–06–25
  3. By: Gastón Llanes (Harvard Business School, Entrepreneurial Management Unit); Ramiro de Elejalde (Universidad Carlos III de Madrid)
    Abstract: We present a model of industry equilibrium to study the coexistence of Open Source (OS) and Proprietary (P) firms. Two novel aspects of the model are: (1) participation in OS arises as the optimal decision of profit-maximizing firms, and (2) OS and P firms may (or may not) coexist in equilibrium. Firms decide their type and investment in R&D, and sell packages composed of a primary good (like software) and a complementary private good. The only difference between both kinds of firms is that OS share their technological advances on the primary good, while P keep their innovations private. The main contribution of the paper is to determine conditions under which OS and P coexist in equilibrium. Interestingly, this equilibrium is characterized by an asymmetric market structure, with a few large P firms and many small OS firms.
    Keywords: Industry Equilibrium, Open Source, Innovation, Complementarity, Technology Sharing, Cooperation in R&D
    JEL: O31 L17 D43
    Date: 2009–06
  4. By: Helen Weeds
    Abstract: Technological change is transforming media industries. Digitization lowers the cost of recording, storage, reproduction and distribution, while computer-based editing facilitates higher quality and special effects. With electronic distribution, a vast range of content can be made available to consumers at little cost. Meanwhile, the distribution of industry production and sales appears to be shifting: the late 20th century was the era of the “hit parade”, but in the 21st attention has shifted to the “long tail”. This paper develops a free entry model of differentiated products with endogenous quality and heterogeneous types to examine the implications of technological change for market structure, quality, and the distribution of firms in media industries. This framework can be used to assess current and future trends in media industries.
    Date: 2009–06–29
  5. By: Aitor Lacuesta; Omar Licandro; Teresa Molina; Luis A. Puch
    Abstract: Why is R&D spending so low in Spanish firms? One possible answer may lie in a small contribution of innovative investments to value creation at the firm level. When pulling together complementary sources of spending data and related evidence to measure these investments, we observe that R&D is low for international standards, but overall intangible investment seems adequate. Data from the Central de Balances are then used to assess the effect of R&D and other innovative investments on the value of Spanish firms. The results suggest that intangible investments have a positive impact on market values which is more substantial for innovative sectors, and this is also the case for R&D capital. Such a positive impact is influenced by the size of the firm and its presence in the stock market. In fact, an alternative explanation to low R&D intensity could be found in the small fraction of firms publicly traded in the stock market in Spain, as far as equity holders tend to value intangible assets more than bond holders. Consequently, promoting a more active role of market valuations might be a promising policy.
    Date: 2009–06

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