nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2010‒05‒22
three papers chosen by
Rui Baptista
Technical University of Lisbon

  1. The Lifecycle of the Financial Sector and Other Speculative Industries By Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul
  2. Complexity and the Coordination of technological Knowledge: the Case of innovation Platforms By Consoli Davide; Patrucco Pier Paolo
  3. Open Innovation and Systemic Reconfiguration in the Car Industry: the Case of Electric Vehicles By Enrietti Aldo; Patrucco Pier Paolo

  1. By: Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul
    Abstract: Speculative industries exploit novel technologies subject to two risks. First, there is uncertainty about the fundamental value of the innovation: is it strong or fragile? Second, it is difficult to monitor managers, which creates moral hazard. Because of moral hazard, managers earn agency rents in equilibrium. As time goes by and profits are observed, beliefs about the industry are rationally updated. If the industry is strong, confidence builds up. Initially this spurs growth. But increasingly confident managers end up requesting very large rents, which curb the growth of the speculative sector. If rents become too high, investors may give up on incentives, and risk and failure rates rise. Furthermore, if the innovation is fragile, eventually there is a crisis, and the industry shrinks. Our model thus captures important stylized facts of the financial innovation wave which took place at the beginning of this century.
    Date: 2009–04
  2. By: Consoli Davide; Patrucco Pier Paolo (University of Turin)
    Date: 2010–05
  3. By: Enrietti Aldo (University of Turin); Patrucco Pier Paolo (University of Turin)
    Date: 2010–05

This nep-tid issue is ©2010 by Rui Baptista. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.