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on Technology and Industrial Dynamics |
| By: | Committee, Nobel Prize (Nobel Prize Committee) |
| Abstract: | To what extent should the government intervene in the marketplace? Economists often consider fiercely competitive markets to be in the public interest. When producers in such markets strive to earn a profit, they are led — as if by an invisible hand — to deliver high quality at low cost. But many industries are not very competitive, and this lack of competition widens the scope for beneficial public intervention. Theories of regulation and competition policy aim to provide useful scientific guidance for such intervention. Clearly, any recommendations must rest on a sound understanding of how imperfectly competitive markets work. When a firm has market power, how will it behave? How does its behavior affect the firm’s suppliers, customers, and competitors? Questions like these are studied within the field of Industrial Organization (IO). George Stigler was awarded the 1982 Prize in Economic Sciences “for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation”. Since then, however, the IO field has undergone rapid development, indeed a revolution. This revolution has greatly enhanced our understanding of imperfectly competitive markets, which in turn has laid a foundation for better informed competition policy. Comparable progress has been made in the theory of optimal regulation of firms with market power. |
| Keywords: | Market power; |
| JEL: | D40 |
| Date: | 2014–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2014_002&r=tid |
| By: | Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Ivan Savin (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | This paper analyzes whether firms conducting internal R&D and acquiring external high-tech equipment experience a complementarity effect. For German CIS data we conduct a complete set of indirect and direct complementarity tests refining the analysis by looking at various types of innovations and industries. Complementary effects are found in the indirect but not so in the direct approach. In contrast to previous literature, we find the distinct R&D strategy choices to be significant drivers of innovative activity and we identify contextual variables explaining the joint occurrence of the two strategies. |
| Keywords: | complementarity, equipment with embodied technology, innovation, internal R&D, Pavitt's sectoral taxonomy |
| JEL: | O14 O31 O32 O33 |
| Date: | 2014–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-023&r=tid |
| By: | Sara Amoroso Author-1-Name-First: Sara Author-1-Name-Last: Amoroso (European Commission JRC-IPTS) |
| Abstract: | The paper investigates the barriers to collaboration in terms of hidden transaction costs, by deriving the distribution of the operating costs and sunk costs associated with firms’ investment choices in R&D and innovation activities with or without a research partner. To retrieve both fixed and sunk costs of R&D and innovation activities with or without a research partner, we develop and estimate a structural dynamic monopoly model to quantify the linkages between R&D spending, innovation and cooperation investment choices, and endogenous productivity. We find that the sunk costs of innovations are smaller when collaborating with a research partner; the probability to spend in R&D or to innovate increases with the level of productivity, when collaborating in R&D and innovation; finally, we find that the sunk costs of innovation are 1.5 to 3 times smaller than the sunk costs of R&D. Additionally, the suggested structural framework of firm heterogeneity in cost functions offers a straightforward extension to policy impact evaluation. |
| Keywords: | R&D cooperation, transaction costs, dynamic structural model. |
| JEL: | D22 D23 L14 L60 O32 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:201402&r=tid |
| By: | Annalisa Caloffi; Federica Rossi; Margherita Russo |
| Abstract: | Greater understanding of what factors promote the formation of innovation networks and their successful performance would help policymakers improve the design of policy interventions aimed at funding R&D projects to be carried out by networks of innovators. In this paper, we focus on the organizations that can play the role of intermediaries in the networks, facilitating the involvement of other participants and promoting communication and knowledge flows within the network. Based on an original empirical dataset, capturing the relationships between organizations involved in a set of publicly-funded programmes in support of innovation networks, we have tried to identify what are the main features of different types of intermediaries based on an analysis of their positions within networks of relationships. We have observed that agents that occupy broker positions – linking agents that are not connected to each other – are more likely to be found in technologically turbulent environments, while the agents that occupy intercohesive positions – bridging cohesive communities of network agents – operate in more stable contexts. Intermediaries in general are more likely to be local governments. However, besides this, it is not possible to clearly identify organizations that, by nature, are more likely to be either brokers or intercohesive agents: different innovation networks may require different organizations to mediate relationships between the other participants. |
| Keywords: | Innovation policy, innovation networks, social network analysis, intermediaries, brokers, intercohesion |
| JEL: | D85 O31 O32 O38 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:mod:dembwp:0030&r=tid |
| By: | Falato, Antonio (Board of Governors of the Federal Reserve System (U.S.)); Sim, Jae W. (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | This paper uses the staggered changes of R&D tax credits across U.S. states and over time as a quasi-natural experiment to examine the impact of innovation on corporate liquidity. By generating plausibly independent variation in firms' incentive to invest in R&D, we are able to assess the empirical importance of specific theories of the link between innovation and corporate liquidity. Firms increase (decrease) their cash to asset ratios by about one and a half percentage point when their home state increases (cuts) R&D tax credits. These baseline difference-in-differences estimates hold up to a battery of validation, falsification, and robustness checks, which corroborate their internal and external validity. The treatment effect of R&D tax credits increases monotonically with several specific proxies for debt and equity financing frictions. Increases (cuts) in tax credits also lead to increases (decreases) in the ratios of cash to bank lines of credit and to book equity, and to decreases (increases) in bank debt, secured debt, and overall net indebtness, supporting debt and equity financing channels through which innovation impacts the demand for cash. We also find support for a product market competition channel, and assess repatriation and agency explanations. Overall, our analysis offers endogeneity-free evidence that innovation is a first-order driver of corporate liquidity management decisions. |
| Keywords: | Determinants of corporate cash holdings; financial economics of innovation |
| Date: | 2014–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-72&r=tid |
| By: | Caliendo, Lorenzo (Yale University); Parro, Fernando (Board of Governors of the Federal Reserve System (U.S.)); Rossi-Hansberg, Esteban (Princeton University); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond) |
| Abstract: | We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We fi nd that such elasticities can vary signi cantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy. We highlight the role of these elasticities by tracing out the effects of productivity gains in California in the Computers and Electronics industry between 2002 and 2007 on all other U.S. sectors and regions. |
| Keywords: | Interregional trade; intersectoral linkages; total factor productivity; gross domestic product; factor mobility |
| JEL: | F10 F11 O40 O47 R12 R13 |
| Date: | 2014–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1119&r=tid |
| By: | Joelle Noailly; Roger Smeets (The Centre for International Environmental Studies, The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | This paper investigates the determinants of directed technical change at the Firm level in the electricity generation sector. We use firm-level data on patents filed in renewable (REN) and fossil fuel (FF) technologies by 5,261 european firms over the period 1978-2006. We investigate how energy prices, market size and knowledge stocks affect firms' incentives to innovate in one technology relative to another and how these factors may thereby induce a shift from FF to REN technology in the electricity generation sector. We separately study small specialized firms, which innovate in only one type of technology during our sample period, and large mixed firms, which innovate in both technologies. We also separate the extensive margin innovation decision (i.e. whether to conduct innovation) from the intensive margin decision (i.e. how much to innovate). Overall, we find that all three factors - energy prices, market sizes and past knowledge stocks - matter to redirect innovation towards REN and away from FF technologies. Yet, we find that these factors have a larger impact on closing the technology gap through the entry (and exit) of small specialized firms, rather than through large mixed firms' innovation. An implication of our results is that firm dynamics are of direct policy interest to induce the replacement of FF by REN technologies in the electricity generation sector. |
| Keywords: | Directed technical change; Renewable energy; Fossil fuel energy; Patents; Innovation; Firm dynamics |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_24&r=tid |
| By: | Simone Borghesi (University of Siena, Italy.); Giulio Cainelli (University of Padova, Italy.); Massimiliano Mazzanti (University of Ferrara, Italy; SEEDS, Ferrara, Italy.) |
| Abstract: | This paper examines the different forces underlying the adoption of environmental innovations (EI), with a focus on policy related EI. In particular, exploiting the 2006-2008 wave of the Italian Community Innovation Survey (CIS), we investigate whether the first phase of the European Emissions Trading Scheme (EU-ETS) exerted some effects on EI in CO2 abatement and energy efficiency controlling for other variables, grouped as internal/external to the firm, and additional environmental regulation factors. Our empirical analyses show that a few factors emerge as particularly relevant such as relationships with other firms and institutions, sectoral energy expenditure intensity, and current and future expected environmental regulation. For the specific role of the EU ETS, we find that, on the one hand ETS sectors are more likely to innovate than non-ETS sectors but on the other hand that sector specific policy stringency is negatively associated with EI, possibly due to anticipatory behavior from early moving innovative firms and some sector idiosyncratic factors. |
| Keywords: | Environmental innovation, EU-ETS, CIS EU data, manufacturing |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:2714&r=tid |