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on Technology and Industrial Dynamics |
| By: | Aghion, Philippe; Howitt, Peter; Prantl, Susanne |
| Abstract: | In this paper, we provide empirical evidence to the effect that strong patent rights may complement competition-increasing product market reforms in fostering innovation. First, we find that the product market reform induced by the large-scale internal market reform of the European Union in 1992 enhanced, on average, innovative investments in manufacturing industries of countries with strong patent rights since the pre-sample period, but not so in industries of countries with weaker patent rights. Second, the positive response to the product market reform is more pronounced in industries where, in general, innovators tend to value patent protection higher than in other industries, except for the manufacture of electrical and optical equipment. The observed complementarity between competition and patent protection can be rationalized using a Schumpeterian growth model with step-by-step innovation. In such a model, better patent protection prolongs the period over which a firm that successfully escapes competition by innovating, actually enjoys higher monopoly rents from its technological upgrade. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Riccardo Crescenzi; Luisa Gagliardi; Simona Iammarino |
| Abstract: | This paper looks at foreign Multinational Enterprises (MNEs) investing in the UK and at their impact on the innovation performance of domestic firms active in their same sector. By employing data on Foreign Direct Investments matched with firm-level information the paper develops a direct measure of capital inflows at a three-digit industry level. In order to capture innovation in both manufacturing and services the paper relies on a broader proxy for firm innovativeness based on the Community Innovation Survey (CIS). The results suggest that domestic firms active in sectors with greater investments by MNEs show a stronger innovative performance. However, the heterogeneity across domestic firms in terms of internationalization of both their market engagement and ownership structure is the main driver of this effect. |
| Keywords: | multinational enterprises; innovation technological change; intra-industry knowledge diffusion; community innovation survey; United Kingdom |
| JEL: | F22 O33 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John |
| Abstract: | Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Giovanni Marin (IRCrES-CNR, Milano, Italy); Roberto Zoboli (DISEIS, Catholic University of Milano, Italy) |
| Abstract: | The structural change of the economy towards an increasing share of services is seen in environmental economics as a fundamental driver of ‘decoupling’ between economic growth and environmental pressures. The environmental and socio-economic consequence of structural change, however, can be less straightforward when economic interdependencies are considered. In this paper we evaluate the implications of structural change towards services in the EU in terms of environmental pressures (aggregate and by sector, direct and indirect). The changing patterns in environmental pressures are analyses vis à vis the corresponding changes in the distribution of employment and value added. For carrying out this integrated assessment we use Environmentally Extended Multi Regional Input Output modelling applied to data from the World Input Output Database (WIOD). The results suggest that the service sectors is characterized by a lower emission intensity than the industrial sectors, when looking at direct emissions (‘production perspective’) but this gap is much smaller when considering also indirect emissions in a ‘vertically integrated’ approach (‘consumption perspective’). Moreover, changes in the production structure of the EU economy in absence of relevant changes in the composition of the final demand induce an increased reliance on environmental pressures, employment and value added generated abroad. The integrated assessment of these ‘global footprints’ suggests that the EU is transferring worldwide more emissions that value added and employment. This form of ‘unequal exchange’ can be relevant for development and environmental policies, in particular those on global climate change. |
| Keywords: | EE-MRIO; structural change; carbon leakage; production and consumption perspective; international trade |
| JEL: | C67 F18 Q52 Q55 Q56 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Békés, Gábor; Hornok, Cecília; Muraközy, Balázs |
| Abstract: | We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seems to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and 'fully globalized' firms tend to charge around 100% higher markups than non-globalized firms. |
| Keywords: | markups,exporting,importing,FDI,innovation |
| JEL: | D22 D24 F14 L11 L60 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Luis Garicano; Claire Lelargez; John Van Reenen |
| Abstract: | We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where many labor laws start to bind on firms with 50 or more employees. Using population data on firms between 1995 and 2007, we structurally estimate the key parameters of our model to construct counterfactual size, productivity and welfare distributions. We find that the cost of these regulations is equivalent to that of a 2.3% variable tax on labor. In our baseline case with French levels of partial real wage inflexibility welfare costs of the regulations are 3.4% of GDP (falling to 1.3% if real wages were perfectly flexible downwards). The main losers from the regulation are workers - and to a lesser extent, large firms - and the main winners are small firms. |
| Keywords: | Firm size; productivity; labor regulation; power law |
| JEL: | J1 N0 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=tid |
| By: | Thierry Mayer; Marc J. Melitz; Gianmarco I. P. Ottaviano |
| Abstract: | We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multi-product firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets .and the induced product mix reallocations - induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial .and explain an important share of aggregate productivity fluctuations for French manufacturing. |
| Keywords: | productivity, trade, competition |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=tid |