nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2011‒07‒13
five papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Endogenous Market Structures and Innovation by Leaders: an Empirical Test By Federico Etro; Dirk Czarnitzki; Kornelius Kraft
  2. Entry and Competition in the Pharmaceutical Market following Patent Expiry By Appelt, Silvia
  3. Refusal to Deal, Intellectual Property Rights, and Antitrust By Chen, Yongmin
  4. Firm Lifecycles and External Restructuring By Ari Hyytinen; Mika Maliranta
  5. Innovation and Productivity By Bronwyn H. Hall

  1. By: Federico Etro (Department of Economics, University Of Venice Cà Foscari); Dirk Czarnitzki (K.U. Leuven); Kornelius Kraft (Technical University of Dortmund)
    Abstract: Simple models of competition for the market with endogenous entry show that, contrary to the Arrow view, an endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats as perceived by the firms reduce R&D intensity for the average firm, but they increase it for an incumbent leader. These results hold after a number of robustness tests with instrumental variable regressions.
    Keywords: Endogenous market structures, innovation, leadership
    JEL: O31 O32
    Date: 2011
  2. By: Appelt, Silvia
    Abstract: This dissertation encompasses three essays on entry and competition in the German generic drug market. The first paper examines the market entry decisions of generic companies and finds that original drug producrs do not create barriers to entry by launching a generic version of the brand drug prior to patent expiry. The second paper examines generic market share dynamics and patients‘ switching behaviors among generic drugs. The analysis shows that generic market shares are little influenced by prices and highly persistent over time, conferring a substantial advantage to first generic entrants. Price differentials likewise have a negligible impact on the likelihood that patients switch to a generic drug offered by a different manufacturer. The third paper investigates generic price differentials and provides evidence of economies of scope and reputation effects.
    Keywords: Generic Entry; Generic Market Share Dynamics; Patient Switching Behavior; Generic Price Dispersion
    Date: 2011–06–01
  3. By: Chen, Yongmin
    Abstract: A vertically integrated firm, having acquired the intellectual property (IP) through innovation to become an input monopolist, can extract surplus by supplying efficient downstream competitors. That the monopolist would refuse to do so is puzzling and has led to numerous debates in antitrust. In this paper, I clarify the economic logic of refusal to deal, and identify conditions under which prohibiting such conduct would raise or lower consumer and social welfare. I further show how IP protection (as determined by IP laws) and restrictions on IP holders' conduct (as determined by antitrust laws) may interact to affect innovation incentive and post-innovation market performance.
    Keywords: Refusal to Deal; Intellectual Property Rights; IP protection; Antitrust; innovation
    JEL: O3 L1 L4
    Date: 2011–06
  4. By: Ari Hyytinen; Mika Maliranta
    Abstract: This paper studies how firms contribute to the productivity growth of an industry over their lifecycle. We present a decomposition method that allows us to condition the components of productivity growth on the age of production units. We find evidence for a prolonged positive exit effect that mirrors market selection during the early stages of firms’ lifecycle. This effect is tightly related to the negative initial productivity effect of entry. We also find some evidence that productivity-enhancing reallocation of resources between firms is concentrated on the middle aged firms.
    Keywords: productivity, decomposition, lifecycle, entry, exit
    JEL: O12 O14 O47
    Date: 2011–06–27
  5. By: Bronwyn H. Hall
    Abstract: What do we know about the relationship between innovation and productivity among firms? The workhorse model of this relationship is presented and the implications of analysis using this model and the usually available data on product and process innovation are derived. The recent empirical evidence on the relationship between innovation and productivity in firms is then surveyed. The conclusion is that there are substantial positive impacts of product innovation on revenue productivity, but that the impact of process innovation is more ambiguous, suggesting some market power on the part of the firms being analyzed.
    JEL: O30
    Date: 2011–06

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