|
on Technology and Industrial Dynamics |
| By: | Erzo G.J. Luttmer |
| Abstract: | Although employment at individual firms tends to be highly non-stationary, the employment size distribution of all firms in the United States appears to be stationary. It closely resembles a Pareto distribution. There is a lot of entry and exit, mostly of small firms. This paper surveys general equilibrium models that can be used to interpret these facts and explores the role of innovation by new and incumbent firms in determining aggregate growth. The existence of a balanced growth path with a stationary employment size distribution depends crucially on assumptions made about the cost of entry. Some type of labor must be an essential input in setting up new firms. |
| Keywords: | Productivity |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:678&r=tid |
| By: | Appelt, Silvia |
| Abstract: | Patent holders frequently attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Competition in off-patent pharmaceutical markets may be adversely affected if early entry substantially impairs the attractiveness of subsequent market entry. I examine generic entry decisions made in the course of recent patent expiries to quantify the impact of early entry on incentives for generic entry. Using unique micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Drug markets' pre-entry revenues largely determine both independent generic entry and early entry decisions. Early entry in turn has no significant impact on the likelihood of generic entry. Original drug producers appear to authorize generic entry prior to loss of exclusivity primarily fueled by rent-seeking rather than strategic entry-deterrence motives. |
| Keywords: | Generic Entry; Early Entry; Anticompetitive Practices |
| JEL: | L41 I11 O34 C35 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11476&r=tid |
| By: | Ederington, Josh; McCalman, Phillip |
| Abstract: | A perennial case for industrial policy is based on the protection of young or emerging industries. Despite a natural association with concepts of life cycles, industrial policy has not been analyzed in the context of an industry life-cycle model. In particular, an important life-cycle characteristic, the potential for very large changes in the rate of net entry, is ignored. In this paper, we demonstrate how the impact of industrial policy depends critically on the entry and exit dynamics within an industry. In particular, we construct a model of technology adoption in which the number of firms is endogenous, and derive a set of novel predictions about the effects of protection on firm technology decisions. Specifically, we show that permanent protection can induce earlier adoption, but also decreases the probability that a given firm adopts the new technology. Likewise, we demonstrate that reducing the duration of protection results in faster adoption than permanent protection, but also reduces a given firms probability of adoption. Finally, we show that, for industries characterized by flexibility in firm numbers, protection does not change the rate of technology adoption but does increase the size and probability of a shakeout (large scale net exit). |
| Keywords: | GATT/WTO; Trade Policy; Trade and Firm Productivity |
| JEL: | F1 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22361&r=tid |
| By: | Bruno Merlevede; Koen Schoors; Mariana Spatareanu |
| Abstract: | We analyze how foreign presence affects local ?firm productivity. We relax the standard implicit assumption that spillovers are immediate and permanent. We ?find that spillovers are dynamic. Foreign entry of a majority foreign owned fi?rm has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned fi?rms has an immediate, though short-lived, positive effect on local suppliers. The entry of majority foreign owned fi?rms also improves the productivity of local suppliers, but the effect materializes later and lasts longer. |
| Keywords: | FDI, spillovers, dynamics, timing |
| JEL: | F2 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2010-001&r=tid |