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on Technology and Industrial Dynamics |
| By: | Marco Marini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Maria Luisa Petit (Department of Computer and System Sciences "Antonio Ruberti", Università di Roma "La Sapienza"); Roberta Sestini (Department of Computer and System Sciences "Antonio Ruberti", Università di Roma "La Sapienza") |
| Abstract: | We present a model of endogenous formation of R&D agreements among firms in which also the timing of R&D investment is made endogenous. The purpose is to bridge two usually separate streams of literature, the noncooperative formation of R&D alliances and the endogenous timing literature. Our approach allows to consider the formation of R&D agreements over time. It is shown that, when both R&D spillovers and investment costs are sufficiently low, firms may find difficult to maintain a stable R&D agreement due to the strong incentive to invest noncooperatively as leaders. In such a case, to be stable a R&D agreement requires that the joint investment occurs at the initial stage, avoiding any delay. When instead R&D spillover rates are sufficiently high, the cooperation in R&D constitutes a profitable option, although firms also possess the incentive to sequence their investment over time. Finally, when spillovers are asymmetric and the knowledge leaks mainly from the leader to the follower, to invest as follower becomes extremely profitable, making R&D alliances hard to sustain unless firms strategically delay their joint investment in R&D. |
| Keywords: | R&D investment, Spillovers, Endogenous Timing. |
| JEL: | C72 D43 L11 L13 O30 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:urb:wpaper:11_04&r=tid |
| By: | Schaumans, C.B.C.; Verboven, F.L. (Tilburg University, Center for Economic Research) |
| Abstract: | We propose a methodology for estimating the competition effects from entry when firms sell differentiated products. We first derive precise conditions under which Bres- nahan and Reiss'entry threshold ratios (ETRs) can be used to test for the presence and to measure the magnitude of competition effects. We then show how to augment the traditional entry model with a revenue equation. This revenue equation serves to adjust the ETRs by the extent of market expansion from entry, and leads to unbiased estimates of the competition effects from entry. We apply our approach to seven different local service sectors. We find that entry typically leads to significant market expansion, implying that traditional ETRs may substantially underestimate the com- petition effects from entry. In most sectors, the second entrant reduces markups by at least 30%, whereas the third or subsequent entrants have smaller or insignificant effects. In one sector, we find that even the second entrant does not reduce markups, consistent with a recent decision by the competition authority. |
| Keywords: | competition;entry;local services sectors;entry threshold ratios. |
| JEL: | K21 L13 L41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011049&r=tid |
| By: | Tirole, Jean (University of Toulouse); Weyl, Glen (Harvard University) |
| Abstract: | What is the best way to reward innovation? While prizes avoid deadweight loss, intellectual property screens out projects generating low consumer surplus per unit sold. We build a model that formalizes this trade-off and develop tools for solving the resulting multidimensional screening problem. Optimal policy generally calls for some market power but never full monopoly pricing. The appropriate degree of market power is determined by a value-weighted average of the innovation supply elasticity multiplied by the log-variance of innovation quality. This quantifies the value of the materialistic genius long associated with entrepreneurship, opening it to empirical calibration. Our results also apply to the pricing of platforms and public infrastructure. |
| Date: | 2010–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:23108&r=tid |
| By: | Michele Cincera; Reinhilde Veugelers |
| Abstract: | Innovation in the European Union remains weak and there are relatively few signs of progress. In this policy contribution, Reinhilde Veugelers and Michele Cincera give evidence to show that compared to the US, the EU has fewer young firms among its leading innovators and the primary driver of this private R&D gap is due to the fact that young leading innovators in the EU are less R&D intensive than their US counterparts. This paper complements the Bruegel policy brief, EuropeÂ?s missing yollies. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:437&r=tid |
| By: | Maré, David C. (Motu Economic and Public Policy Research Trust); Fabling, Richard (Reserve Bank of New Zealand); Stillman, Steven (Motu Economic and Public Policy Research Trust) |
| Abstract: | We combine firm-level innovation data with area-level Census data to examine the relationship between local workforce characteristics, especially the presence of immigrants and local skills, and the likelihood of innovation by firms. We examine a range of innovation outcomes, and test the relationship for selected subgroups of firms. We find a positive relationship between local workforce characteristics and average innovation outcomes in labour market areas, but this is accounted for by variation in firm characteristics such as firm size, industry, and research and development expenditure. Controlling for these influences, we find no systematic evidence of an independent link between local workforce characteristics and innovation. |
| Keywords: | local labour market, immigration, innovation |
| JEL: | O31 R30 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5686&r=tid |