nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒07‒02
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Competition, Innovation, and the Number of Firms By Pedro Bento
  2. Estimating the local average treatment effect of R&D subsidies in a pan-European program By Paul Hünermund; Dirk Czarnitzki
  3. Thanks, but no thanks: Companies’ response to R&D tax credits By Daniel Neicu; Stijn Kelchtermans; Peter Teirlinck
  4. Firm-level environmentally sensitive productivity and innovation in China By Fujii, Hidemichi; Cao, Jing; Managi, Shunsuke
  5. Green startups and local knowledge bases: Newborn suppliers of energy-related technologies in Italian Provinces By Colombelli, Alessandra; Quatraro, Francesco
  6. Measures of the Contribution made by ICT to Innovation Output. An Update of the ICT Innovation Output Indicator By Annarosa Pesole
  7. Adoption of New Information and Communications Technologies in the Workplace Today By Timothy Bresnahan; Pai-Ling Yin
  8. Financial regimes, financialization patterns and industrial performances: preliminary remarks By Giovanni Dosi; Valerie Revest; Alessandro Sapio

  1. By: Pedro Bento (Texas A&M University, Department of Economics)
    Abstract: I look at manufacturing firms across countries and over time, and find that barriers to competition actually increase the number of firms. This finding contradicts a central feature of all current models of endogenous markups and free entry, that higher barriers should reduce competition and firm entry, thereby increasing markups. To rationalize this finding, I extend a standard model in two ways. First, I allow for multi-product firms. Second, I model barriers as increasing the cost of entering a product market, rather than the cost of forming a firm. Higher barriers to competition reduce the number of products per firm and per market, but increase markups and the total number of firms. Calibrating the model to U.S. data, I estimate cross-country differences in consumption as large as 3-fold due to observed differences in barriers to competition. In addition, increasing barriers generates either a negative or inverted-U relationship between firm-level innovation and markups. While higher markups encourage product-level innovation through the usual Schumpeterian mechanism, firm-level innovation (at least eventually) drops as firms reduce their number of products. I provide new evidence supporting these two novel implications of the model - that product-level innovation increases with barriers to competition, while the number of products per firm decreases.
    Keywords: product market regulation, entry costs, firm size, productivity, innovation, markups, competition, multi-product firms
    JEL: L1 L5 O1 O3 O4
    Date: 2016–06–08
  2. By: Paul Hünermund; Dirk Czarnitzki
    Abstract: We investigate the eect of Europe's largest multilateral subsidy program for R&D-performing, small and medium-sized enterprises on rm growth. The program was organized under a specic budget allocation rule, referred to as Virtual Common Pot (VCP), which is designed to avoid cross-subsidization between participating countries. This rule creates exogenous variation in treatment status and allows us to identify the local average treatment effect of public R&D grants. In addition, we compare the program's effect under the VCP rule with the standard situation of a Real Common Pot (RCP), where program authorities allocate a single budget according to uniform project evaluation criteria. Our estimates suggest no average eect of grants on rm growth but treatment eects are heterogeneous and increase with project quality. A Real Common Pot would have reduced the cost of policyinduced job creation by 27%. We discuss the implications of our ndings for the coordination of national policy programs within the European Research Area.
    Keywords: Joint Programming Iniatives, R&D Policy, Virtual Common Pot, Instrumental Variable Estimation, European Research Area
    Date: 2016–05
  3. By: Daniel Neicu; Stijn Kelchtermans; Peter Teirlinck
    Abstract: This paper starts from the observation that the majority of firms in Belgium that were eligible for a newly introduced R&D tax credit system does not use it, or is slow to adopt, despite significant potential cost savings. We hypothesize that the R&D support landscape is complex for firms to navigate and that they may cope by relying on their peers’ behaviour to inform their own adoption decisions. We identify endogenous peer effects in industry- and location-based peer groups by exploiting the intransitivity in firms’ peer group networks as well the variation in peer group sizes. The results show that firms’ decisions to use R&D tax credits are indeed influenced by the choices of their peers, primarily in the time window following the introduction. Our analysis complements the literature on peer effects in firm decision making and suggests improvements for the communication of new public support measures for business R&D.
    Keywords: R&D tax credits, peer effects, information diffusion, social interactions
    Date: 2016–06
  4. By: Fujii, Hidemichi; Cao, Jing; Managi, Shunsuke
    Abstract: This study analyzes productive efficiency in relation to CO2 emissions using a unique dataset of 562 Chinese manufacturing firms for the period from 2005 to 2009. We develop a directional distance function approach to identify technical innovators in the area of CO2 emissions. The results indicate that a large number of technical innovators are observed in the textile, paper, steel, and computer industries. Furthermore, there are clearly different trends in productivity change and corporate performance across industries and provinces. This result implies that policy makers need to consider industrial and regional characteristics to develop effective policies that conserve energy and reduce CO2 emissions.
    Keywords: Technical innovator; total factor productivity; technology adoption; CO2 emissions; Chinese manufacturing firm
    JEL: D24 O14 Q55
    Date: 2016–05
  5. By: Colombelli, Alessandra; Quatraro, Francesco (University of Turin)
    Abstract: There is wide consensus about the importance of green technologies for achieving superior economic and environmental performances. The literature on their determinants has neglected the creation of green start-ups as a channel to bring about green technologies in the market. Drawing upon the knowledge spillovers theory of entrepreneurship, we test the relevance of local knowledge stocks, distinguishing between clean and dirty stocks, for the creation of green start-ups. Moreover, the effects of the technological composition of local stocks is investigated, by focusing on technological variety, both related and unrelated, as well as on coherence. Consistently with recent literature, green start-ups are associated to higher levels of variety, pointing to the relevance of diverse and heterogeneous knowledge sources, but in related and complementary technological fields.
    Date: 2016–04
  6. By: Annarosa Pesole (European Commission – JRC - IPTS)
    Abstract: This report presents an update of the ICT Innovation Output Indicator based on the latest available data, and provides a measure of the performance of the European Union (EU) and its Member States in ICT innovation. The ICT Innovation Output Indicator is the contribution of Information and Communication Technologies (ICT) to the Innovation Output Indicator elaborated by the European Commission in 2013. The contribution of ICT has been computed for each underlying component of the Innovation Output Indicator for all EU Member States. Depending on the indicator component analysed and data availability, the ICT contribution to innovation can refer either to innovation in the ICT sector as defined by the classification of economic activities, or to ICT use as a general purpose technology in the rest of the economy. The up-to-date ICT contributions for the EU aggregate are: 1. 28% in technological innovation as measured by patents; 2. 19% in absorption of skills as measured by employment in knowledge intensive activities; 3. 27% in competitiveness of knowledge goods as measured by exports of medium-high tech goods; 4. 20% in competitiveness of knowledge services as measured by exports of knowledge intensive services; 5. 23% in innovative firms’ dynamics as measured by employment of innovative fast-growing firms. All data refer to 2013 with the exception of data on patents which refer to 2011. The methodology to compute the ICT Innovation Output Indicator follows the one presented in "How much does ICT contribute to innovation output? An analysis of the ICT component in the innovation output indicator" (Pesole, 2015 ). The reader is referred to this report for more detail on the methodology. The 2013 EU aggregate ICT contributions are very similar to those in 2012 reported by Pesole (2015). The technological innovation component (i.e. ICT PCT patent) increased by two percentage points in 2011 (from 26% to 28%). Similarly, competitiveness of knowledge goods increased from 25% to 27% in 2013. The other contributions remain unchanged. The ICT Innovation Output Indicator delivers a measure of output-oriented ICT innovation that captures both the technological and non-technological aspects of innovation in ICT and ranks Member States' performance. The three top performing countries remain the same as in Pesole 2015: Finland, Ireland and Sweden.
    Keywords: ICT innovation output indicator, measurement of ICT innovation
    Date: 2016–06
  7. By: Timothy Bresnahan; Pai-Ling Yin
    Abstract: The invention of new applications based on information and communications technologies (ICTs) has had two economic effects up to now. These applications have transformed production, creating value for applications-inventing companies and their customers and increasing economic growth through quality improvements. The same applications have shifted the relative demand for different kinds of labor, raising the demand for already highly-compensated managers and professionals relative to other workers. This paper considers the likely impact of new ICT technologies coming into application in the workplace today in light of the economic and technical forces behind ICT application up to now.
    JEL: O3
    Date: 2016–06
  8. By: Giovanni Dosi; Valerie Revest; Alessandro Sapio
    Abstract: The evolutionary taxonomy of financial systems, outlined by Dosi (1990), argued that market-based systems would be comparatively more engaged in the exploration of new technological paradigms, as an outcome of market selective pressure, whereas the more institutionalized finance allocation in credit-based systems would give them an advantage in cumulative learning. This article offers a preliminary assessment of those conjectures in light of the institutional change associated with the financialization process and the "maximizing shareholders value" principle. The available evidence suggests that financialization has de-linked the performance of firms on the financial markets from the determinants of firm-level growth and innovation. Selection among companies increasingly occurs on financial markets, along criteria of short-term returns. As such, financialization has contributed to compress and somewhat degrade the specific properties of the finance-innovation nexus of both financial system archetypes, deteriorating both static and Schumpeterian efficiency.
    Keywords: Evolutionary Theory, Financial Systems, Firm growth, Innovation, Financialization
    Date: 2016–06–15

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