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on Technology and Industrial Dynamics |
| By: | Arijit Mukherjee (School of Business and Economics, Loughborough University, UK) |
| Abstract: | It is generally believed that patent pools by complementary input suppliers make the consumers, final goods producers and the society better off by reducing the complements problem. We show that this may not be the case under endogenous technology choice. Although a patent pool reduces input price, it may make the consumers and the society worse off by reducing innovation. We also show that a patent pool makes the input suppliers better off, but it may not make all final goods producers better off compared with non-cooperation between the input suppliers. |
| Keywords: | Complementary inputs; Patent pool; Innovation; Welfare |
| JEL: | L13 O31 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2013_07&r=tid |
| By: | Hall, Joshua (University of Tampa); Laincz, Christopher (Department of Economics & International Business LeBow College of Business Drexel University) |
| Abstract: | When firms engaged in R&D are observably heterogeneous (in size) and policymakers are able to condition policy on the observed heterogeneity, what is the optimal policy? This paper starts with a static two-stage duopoly model of R&D competition with uncertainty and finds it welfare enhancing to subsidize the larger firms, with no subsidies for (or taxes on) the smaller firm (extending existing results, Lahiri and Ono, 1999). This result follows because marginal cost reductions by the largest firm have larger net effects on consumer and producer surplus. The policymaker's goal is effectively to minimize the average cost of production. However, when we move to a dynamic setting, the optimal policy is less clear. When firms compete repeatedly, the degree of competition becomes an endogenous variable over the infinite horizon. The optimal policy depends on the nature of long-run competition. In some situations, the optimal policy remains the same, subsidize the larger firm. However, in other scenarios, the policymaker optimally chooses to subsidize the smaller firm more heavily to promote more intense competition which lowers the long-run deadweight loss and long run costs through increased R&D competition. |
| Keywords: | R&D; subsidies; duopoly; dynamics; heterogeneous firms |
| JEL: | L11 L16 O31 |
| Date: | 2012–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2012_013&r=tid |
| By: | Aiello, Francesco; Pupo, Valeria; Ricotta, Fernanda |
| Abstract: | Sectoral and territorial specificities affect the firm’s capabilities of being productive. While there is a wide consensus on this, a quantitative measure of the these effects has been lacking. To this end, we combine a dataset of Italian firms with some meso regional and sectoral variables and apply a cross-classified model that allows for a clear distinction between firm, region-specific and sector-specific effects. After observing a marked TFP heterogeneity across firms, the paper addresses the issue of understanding how much differences in firms’ productivity depend on regional localisation and sector specificities. Results refer to 2004-2006 and are threefold. Firstly, they confirm that the main source of firm variety is mostly due to differences revealed at individual level. Secondly, we find that sector is more important than location in explaining firms’ TFP. Lastly, the results show that firm TFP increases when it belongs to more innovative sectors. Similarly, companies get benefits from belonging to sectors where there is a high proportion of firms using R&D public support and a high propensity to collaborate in innovative projects. |
| Keywords: | Total Factor Productivity, Firms’ Heterogeneity, Sectoral innovation, Geography, Cross-Classified Models |
| JEL: | L25 L60 O33 |
| Date: | 2013–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48573&r=tid |