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on Technology and Industrial Dynamics |
| By: | Arenas Díaz, Guillermo (Università Cattolica del Sacro Cuore); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | This study investigates the relationship between Artificial Intelligence (AI) and innovation inputs in Spanish manufacturing firms. While AI is increasingly recognized as a driver of productivity and economic growth, its role in shaping firms’ innovation strategies remains underexplored. Using firm-level data, our analysis focuses on whether AI complements innovation inputs - specifically R&D and Embodied Technological Change (ETC) - and whether AI can be considered as a Method of Invention, able to trigger subsequent innovation investments. Results show a positive association between AI adoption and both internal R&D and ETC, in a static and a dynamic framework. Furtheremore, empirical evidence also highlights heterogeneity, with important peculiarities affecting large vs small firms and high-tech vs low-tech companies. These findings suggest that AI may act as both a complement and a catalyst, depending on firm characteristics. |
| Keywords: | innovation inputs, R&D, method of invention, Artificial Intelligence, innovative complementarities |
| JEL: | O31 O32 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18175 |
| By: | Martinez Cillero Maria (European Commission - JRC); Napolitano Lorenzo (European Commission - JRC); Rentocchini Francesco (European Commission - JRC); Seri Cecilia; Zaurino Elena (European Commission - JRC) |
| Abstract: | "Rising market concentration and the dominance of `superstar' firms have sparked concerns about declining competition and innovation. While technological change and globalisation are key drivers, mergers and acquisitions (M&As) may also play a role. This paper investigates whether firms use technological M&As — acquisitions of innovative subsidiaries with patent portfolios — to enhance market power. Using a global panel of 8, 314 publicly listed firms from 2008 to 2020 and a staggered difference-in-differences approach, we find that such acquisitions increase acquiring firms’ markups by 2% on average. Effects are stronger among top R&D investors, US-based firms, and those in high-tech manufacturing. The main mechanism appears to be greater insulation from competitors via acquired patents, which limit knowledge spillovers and raise entry barriers. These findings highlight the need for antitrust policies that balance innovation incentives with the risks of growing market power." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:wpaper:202503 |
| By: | Christian Keuschnigg (University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Swiss Finance Institute); Giedrius Kazimieras Stalenis (University of St. Gallen) |
| Abstract: | We study a small open economy that must implement an emissions reduction plan and eventually phase out fossil fuel. R&D leads to the design of energy saving new machines. Endogenous scrapping eliminates old inefficient machines. We identify two distortions that delay the adoption and diffusion of energy saving technology: scrapping of old equipment and investment in new machines are both too low. The optimal policy to manage the energy transition thus combines a carbon tax with a profit tax to speed up exit, and an investment subsidy to speed up investment in new equipment. The optimal policy increases capital turnover, the diffusion of energy saving technology, and thereby mitigates the costs of the energy transition. Compared to a policy that exclusively relies on carbon taxes, the optimal policy could reduce the GDP loss of moving to net zero from 7.8 to 6.1% of GDP. |
| Keywords: | Energy saving innovation, vintage capital, emissions reduction |
| JEL: | D21 D62 H23 O33 Q41 Q43 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2583 |
| By: | Dubois, Pierre |
| Abstract: | We examine pharmaceutical regulations and incentives for innovation from an international perspective, highlighting the public good nature of healthcare innovation and its cross-border diffusion. We summarize the empirical evidence on how push and pull incentives shape R&D investment, innovation, and global access. We emphasize the role of strategic interdependencies and spillovers, including free-riding in R&D financing, learning-by-doing effects, drug shortages, reference pricing, and parallel trade. We then provide new evidence on the international spillovers of pull incentives on innovation, showing that international cooperation and innovative institutions are necessary to better align national regulations with the global objective of sustaining pharmaceutical innovation. |
| Keywords: | Pharmaceutical Regulation, Innovation, R&D, International Spillovers |
| JEL: | L10 L20 I10 I11 I18 |
| Date: | 2025–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131002 |
| By: | Yibo Qiao; Yingcheng Li; Ron Boschma |
| Abstract: | Place dependence is a widely recognized concept but has rarely been quantified in existing research. Employing the Wasserstein Distance algorithm from machine learning literature and China’s Annual Survey of Industrial Firms dataset, this paper introduces a novel method to measure the place dependence of industrial dynamics in Chinese cities, and explore its impact on urban economic performance. Our empirical findings confirm the presence of place dependence in Chinese cities, and show that cities diversifying into more related and complex industries tend to exhibit higher levels of place dependence. Moreover, place dependence appears to complement the effects of relatedness and complexity in enhancing urban economic performance. These findings offer important insights for regional industrial development and urban planning practices. |
| Keywords: | Place dependence, path dependence, knowledge complexity, industrial dynamics, economic performance, China |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2531 |
| By: | Masashige Hamano (Waseda University, School of Political Science and Economics); Yuki Murakami (Waseda University, Graduate School of Economics) |
| Abstract: | This paper highlights the potential for decoupling economic growth from CO2 emissions under strong policy, while providing a tractable framework for analyzing the long-run global green transition. We develop a dynamic stochastic general equilibrium model with heterogeneous firms: green firms abate emissions at higher costs, while brown firms do not. Emissions reduce aggregate productivity but are not internalized in competitive equilibrium. Using global data from 1981 to 2022, we calibrate the model to match observed trends in GDP and emissions. The analysis delivers three main findings. First, while emissions continue to rise, the share of green firms grows over time. Second, faster technological progress amplifies the growth–emissions trade-off, whereas slower progress attenuates it. Third, welfare analysis shows that the optimal emission tax must be substantially higher than current levels, though its role is moderated when combined with abatement innovation. Together, these results underscore the importance of policy in sustaining growth while mitigating environmental externalities. |
| Keywords: | Climate change, Green transition, Heterogeneous firms, Economic growth, DSGE models |
| JEL: | Q54 Q58 E32 F44 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2522 |
| By: | Mohammad Zeqi Yasin |
| Abstract: | Do industrial "superstars" help others up or crowd them out? We examine the relationship between the spillovers of superstar firms (those with the top market share in their industry) and the productivity dynamics in Indonesia. Employing data on Indonesian manufacturing firms from 2001 to 2015, we find that superstar exposures in the market raise both the productivity level and the growth of non-superstar firms through horizontal (within a sector-province) and vertical (across sectors) channels. When we distinguish by ownership, foreign superstars consistently encourage productivity except through the horizontal channel. In contrast, domestic superstars generate positive spillovers through both horizontal and vertical linkages, indicating that foreign firms do not solely drive positive externalities. Furthermore, despite overall productivity growth being positive in 2001-2015, the source of negative growth is mainly driven by within-group reallocation, evidence of misallocation among surviving firms, notably by domestic superstars. Although Indonesian superstar firms are more efficient in their operations, their relatively modest growth rates suggest a potential stagnation, which can be plausibly attributed to limited innovation activity or a slow pace of adopting new technologies. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.11139 |
| By: | Danqing Chen; Carina Kane; Austin Kozlowski; Nadav Kunievsky; James A. Evans |
| Abstract: | Large Language Models have spread rapidly since the release of ChatGPT in late 2022, accompanied by claims of major productivity gains but also concerns about job displacement. This paper examines the short-run labor market effects of LLM adoption by comparing earnings and unemployment across occupations with differing levels of exposure to these technologies. Using a Synthetic Difference in Differences approach, we estimate the impact of LLM exposure on earnings and unemployment. Our findings show that workers in highly exposed occupations experienced earnings increases following ChatGPT's introduction, while unemployment rates remained unchanged. These results suggest that initial labor market adjustments to LLMs operate primarily through earnings rather than worker reallocation. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.15510 |
| By: | Nobel Prize Committee (Nobel Prize Committee) |
| Abstract: | On a daily basis, we are reminded of how fast technology progresses and how it changes the world around us. New discoveries and new innovations affect our lives directly and they also fundamentally affect the economy. Technological change is of course not a new phenomenon. Progress and innovations have occurred since ancient times. What is relatively recent, however, viewed against the entire history of hu- mankind, is the type of innovation-driven economic growth enjoyed by the advanced countries of the world during the last two centuries, and how such high growth rates are sustained. |
| Keywords: | technological innovation; economic growth |
| JEL: | O |
| Date: | 2025–10–13 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nobelp:021675 |