nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2011‒06‒04
three papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Firm Dynamics and Changes in Firm Size Distribution: Non-parametric analysis of the effects of technological and other conditions (Japanese) By GOTO Yasuo
  2. Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents By Rabah Amir; David Encaoua; Yassine Lefouili
  3. Patent and Knowhow Licensing in Japan (Japanese) By NISHIMURA Junichi; OKADA Yosuke

  1. By: GOTO Yasuo
    Abstract: We present an empirical analysis of changes in firm size distribution (FSD), using micro-data for Japanese firms. Two major viewpoints are adopted for the analysis. One is how FSD changes in response to firm dynamics, namely, firm exit and growth. The other is how economic conditions such as financial constraints and technological conditions influence changes in FSD. Non-parametric analysis reveals that economic constraints have different impacts on FSD, even when there seems to be little effect on the total change of distribution. Relaxing financial constraints or increasing minimum efficient scale (MES) attenuate the changes in FSD through exits, but also enhance changes due to growth. These two effects therefore partially cancel out, reducing the overall impact on FSD. On the other hand, the trade ratio significantly affects FSD, because the effects of exit and growth act in the same direction. The relative impact of exit and growth on FSD also differs depending on firm attributes, such as number of years of operation. This result suggests that further empirical analysis using more comprehensive and multifaceted data is needed for studying the effects of economic conditions, such as financial constraints, on changes in firm size distribution.
    Date: 2011–03
  2. By: Rabah Amir (University of Arizona - University of Arizona); David Encaoua (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Yassine Lefouili (GREMAQ - Groupe de recherche en économie mathématique et quantitative - CNRS : UMR5604 - Université des Sciences Sociales - Toulouse I - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - INRA : UMR)
    Abstract: This paper explores a licensor's choice between charging a per-unit royalty or a …fixed fee when her innovation is covered by a weak patent, i.e. a patent that is likely to be invali- dated by a court if challenged. Using a general model where the nature of competition is not speci…ed, we show that the patent holder prefers to use a per-unit royalty scheme if the strategic e¤ect of an increase in a potential licensee's unit cost on the aggregate equi- librium pro…t is positive. To show the mildness of the latter condition, we establish that it holds in a Cournot (resp. Bertrand) oligopoly with homegenous (resp. heterogenous) products under very general assumptions on the demands faced by …rms. As a byproduct of our analysis, we contribute to the oligopoly literature by o¤ering some new insights of independent interest regarding the e¤ects of cost variations on Cournot and Bertrand equilibria.
    Keywords: Keywords: Licensing Schemes, Weak Patents, Patent Litigation.
    Date: 2011–02
  3. By: NISHIMURA Junichi; OKADA Yosuke
    Abstract: Over the past two decades, utilizing markets for technology through licensing and other outsourcing arrangements has emerged as a key to organizing innovative activity. We examine how the rent dissipation effect affects patent and knowhow licensing, controlling organizational capabilities such as firm size, vertical integration, exports, and diversity. A licensor's profit varies and the incentives to license change depending on the rent dissipation effect, which erodes a licensor's profit due to intensifying competition that results from a licensee's entry into the licensor's market. Firms faced with severe competition are marginally exposed to a small rent dissipation effect when licensing their technologies out to rivals, and they can obtain large royalty revenues through such licensing because there are many potential licensees. Using panel data on about ten thousand Japanese firms for the period 1995-2007, we show that the rent dissipation effect facilitates licensing not only between Japanese firms but also between Japanese and foreign firms.
    Date: 2011–02

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