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on Technology and Industrial Dynamics |
| By: | Tommaso Ciarli (SPRU, University of Sussex, UK); Marco Valente (University of L'Aquila, IT) |
| Abstract: | We study the relation between variety, market concentration, and economic growth, along different phases of economic development which entail a number of changes to the structure of production and consumption in the economy. We focus on three aspects of structural change, which are connected and are correlated to variety, market concentration, and economic growth: (i) product quality; (ii) firms’ mark-ups; and (iii) imitation of consumer preferences for price and quality. We model the interactions among several aspects of structural change such as firm size and hierarchical structure, innovation in capital vintages, the emergence of social classes, income distribution, and consumer preferences across and within classes. We find that market concentration has a significant and positive impact on economic growth only in the presence of sufficiently large demand. The strongest effects emerge in the presence of a more skewed firm size distribution and firms producing higher priced and higher quality goods. We find also that this effect is influenced strongly by different aspects of structural change. Changes in the behaviour (or income) of the less wealthy income classes is crucial as is investment in new capital vintages, and the emergence of diverse income classes with heterogeneous consumption preferences. In contrast, we find that supply side product variety, cœteris paribus, has no significant effect on growth. |
| Keywords: | economic growth; structural change; market concentration; consumer dynamics; product variety; agent based simulations |
| JEL: | O11 O41 O33 C63 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2016-06&r=tid |
| By: | Haucap, Justus; Stiebale, Joel |
| Abstract: | This papers analyses how horizontal mergers affect innovation activities of the merged entity and its non-merging competitors. We develop an oligopoly model with heterogeneous firms to derive empirically testable implications. Our model predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm heterogeneity, a merger reduces innovation of both the merged entity and non-merging competitors in an industry with high R&D intensity. Using data on horizontal mergers among pharmaceutical firms in Europe, we find that our empirical results are consistent with many predictions of the theoretical model. Our main result is that after a merger, patenting and R&D of the merged entity and its non-merging rivals declines substantially. The effects are concentrated in markets with high innovation intensity and a high degree of firm heterogeneity. The results are robust towards alternative specifications, using an instrumental variable strategy, and applying a propensity score matching estimator. |
| Keywords: | mergers & acquisitions,innovation,R&D incentives,merger policy |
| JEL: | D22 L13 L4 G34 O31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:218&r=tid |
| By: | Inoue, Hiroyasu; Nakajima, Kentaro; Saito, Yukiko Umeno |
| Abstract: | This study investigates the localization of collaboration in knowledge creation by using the data on Japanese patent applications. Applying distance-based methods, we obtained the following results. First, collaborations are significantly localized at the 5% level with a localization range of approximately 100 km. Second, the localization of collaboration is observed in most technologies. Third, the extent of localization was stable from 1986–2005 despite extensive developments in information and communications technology that facilitate communication between remote organizations. Fourth, the extent of localization is substantially greater in inter-firm collaborations than in intra-firm collaborations. Furthermore, in inter-firm collaborations, the extent of localization is greater in collaborations with small firms. This result suggests that geographic proximity mitigates the firm-border effects in collaborations, especially for small firms. |
| Keywords: | Knowledge creation, Collaboration, Geographic frictions, Firm-border effects |
| JEL: | R12 O31 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:58&r=tid |
| By: | L. Kamran Bilir; Eduardo Morales |
| Abstract: | When firms operate production plants in multiple countries, technological improvements developed in one country may be shared with firm sites abroad for efficiency gain. We develop a dynamic model that allows for such intrafirm transfer, and apply it to measure the impact of innovation on performance for a panel of U.S. multinationals. Our estimates indicate U.S. parent R&D raises performance significantly at firm locations abroad, and also complements R&D by affiliates. Parent R&D is a substantially more important determinant of firm performance than affiliate R&D. We identify these R&D effects using variation in location-specific innovation policies. |
| JEL: | F00 F23 O30 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22160&r=tid |
| By: | Jose-Maria Da-Rocha; Marina Mendes Tavares; Diego Restuccia |
| Abstract: | The large differences in income per capita across countries are mostly accounted for by differences in total factor productivity (TFP). What explains the differences in TFP across countries? Empirical evidence points to factor misallocation across heterogeneous production units as an important factor. We study factor misallocation in a model where establishment-level productivity is endogenous. In this framework, policy distortions not only misallocate resources across a given set of productive units, but also worsen the productivity distribution of establishments and this effect is substantial quantitatively. Reducing the dispersion in revenue productivity by half to the level of the U.S. benchmark in the model implies an increase in aggregate output and TFP by a factor of 7.8-fold. Improved factor allocation accounts for 38 percent of the gain, whereas the change in the productivity distribution accounts for the remaining 62 percent. |
| Keywords: | distortions, misallocation, investment, endogenous productivity, establishments. |
| JEL: | O1 O4 |
| Date: | 2016–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-558&r=tid |
| By: | Johansson, Börje (Jönköping International Business School (JIBS), Centre of Excellence for Science and Innovation Studies (CESIS) & Royal Institute of Technology (KTH)); Lööf, Hans (Centre of Excellence for Science and Innovation Studies (CESIS) & Royal Institute of Technology (KTH)) |
| Abstract: | We introduce a framework for analyzing renewal efforts of firms with distinct categories of innovation and adoption strategies, comprising a firm’s development off its internal knowledge, its access to local knowledge sources and its access to global knowledge sources. A fundamentall aspect is the formation and maintenance of the firm’s renewal capabilities. In this way the analysis provide an explanation of remaining heterogeneity among firms belonging to the same industry such that one group performs above average for long sequences of time, whereas others continue to pperform below average. The analysis applies Swedish data when presenting alternative approaches to provide empirical support in favour of the outlined model of how long-run firm performance associates with each firm’s sustained efforts to combine interal and external knowledge sources. |
| Keywords: | Adoption; Innovation; Innovation outcome; Knowledge sources and networks; Combined internal and external knowledge |
| JEL: | F21 O30 O31 R11 |
| Date: | 2016–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0436&r=tid |
| By: | Fassio, Claudio (LUISS School of European Political Economy) |
| Abstract: | This paper investigates the effect of exporting activities on the innovation strategies of European firms in France, Germany, Italy, Spain and UK. The paper puts forward the hypothesis that such a positive effect is driven two main mechanisms. The first is a technological learning effect that allows firms active in international markets to benefit from foreign knowledge spillovers in technologically advanced markets and decrease their research cost for the development of innovations. The second is a demand effect induced by fast-growing foreign markets that increase the potential output of firms. The empirical analysis, which addresses important endogeneity issues related with the strategic choice of the markets of destination operated by firms, shows that the two effects induce the adoption of different innovation strategies. While the technological learning effect positively affect the decision of firms to introduce brand new product innovations, the demand effect fosters the adoption of efficiency and imitation strategies. The paper shows that the effect of exporting activity on innovation strategies crucially depends on the type of export destinations. The lower levels of the technological learning effect which is found among the export destinations of Italian and Spanish firms might represent a possible obstacle for the ability of these countries to increase their future innovative capacities. |
| Keywords: | Exports; Innovation strategies; European Union economics |
| JEL: | F10 O33 P51 |
| Date: | 2015–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sepewp:2015_002&r=tid |