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on Technology and Industrial Dynamics |
| By: | Uwe Cantner (Friedrich Schiller University Jena, Faculty of Economics and Business Administration) |
| Abstract: | This paper deals with innovative activities of firms, the resulting market success as well as the interdependencies between both. In a first theoretical part, different cases of those interdependencies are investigated by the way of a simple model based on replicator dynamics. It is shown that the resulting differential success (in those activities) of firms in a market leads to specific characteristic pattern of industry dynamics. The second empirical part of the paper is used to get an account of the working of replicator dynamics mechanism within German manufacturing. Doing so changes in firms' market shares and the relation to their respective relative technological performance and to their or innovative performance are investigated with productivity levels as a proxy for technological performance and productivity changes as proxy for innovative performance. |
| Keywords: | Innovation, market competition, replicator dynamics, productivity decomposition |
| JEL: | O3 L1 D24 |
| Date: | 2007–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-078&r=tid |
| By: | Armin Schmutzler (Socioeconomic Institute, University of Zurich) |
| Abstract: | Using several simple examples, this paper shows that the effects of increasing competition on cost-reducing investments can be positive, negative or non-monotone. Also, competition is more likely to increase the investments of leaders than of laggards. To explain these findings, I use a reduced-form model. I identify four different transmission channels by which competition affects investments. Competition typically (i) reduces markups, but (ii) increases the sensitivity of equilibrium demand to marginal costs — this already implies countervailing effects on investment incentives. These difficulties are compounded because competition has ambiguous effects on (iii) the level of equilibrium demand and (iv) the extent to which efficiency gains are passed through to consumers as lower prices. Because of these ambiguities, there is not much hope of establishing a robust relation between competition and investment. |
| Keywords: | competition, investment, cost reduction |
| JEL: | L13 L20 L22 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0716&r=tid |
| By: | Dario Sacco (Socioeconomic Institute, University of Zurich) |
| Abstract: | The paper analyzes the effects of competitive intensity on firms' incentives to invest in process innovations through an experiment based on two-stage games, where R&D investment choices are followed by product market competition. An increase in the intensity of competition is modeled as an increase in the number of Þrms or as a switch from Cournot to Bertrand. The theoretical prediction is that more intense competition is unfavorable to investments for both cases. In the experiment it turns out that the way of modeling the intensity of competition is essential. The theoretical prediction is confirmed for the number effects. On the other hand, the comparison of Cournot and Bertrand shows that more intense competition is beneÞcial for investments. |
| Keywords: | R&D investment, intensity of competition, experiment |
| JEL: | C92 L13 O31 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0714&r=tid |
| By: | Jinyoung Kim (Department of Economics, Korea University); Sangjoon John Lee (Alfred University); Gerald Marschke (University at Albany and IZA) |
| Abstract: | It has long been recognized that worker wages and possibly productivity are higher in large firms. Moreover, at least since Schumpeter (1942) economists have been interested in the relative efficiency of large firms in the research and development enterprise. This paper uses longitudinal worker-firm-matched data to examine the relationship between the productivity of workers specifically engaged in innovation and firm size in the pharmaceutical and semiconductor industries. In both industries, we find that inventors?productivity increases with firm size. This result holds across different specifications and even after controlling for inventors?experience, education, the quality of other inventors in the firm, and other firm characteristics. We find evidence in the pharmaceutical industry that this is partly accounted for by differences between how large and small firms organize R&D activities. |
| Keywords: | Patents, Innovation, Labor productivity, Research, Firm size |
| JEL: | O30 O32 O34 J21 J24 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:iek:wpaper:0708&r=tid |
| By: | Gerald A. Carlino; Robert M. Hunt |
| Abstract: | This paper extends the research in Carlino, Chatterjee, and Hunt (2007) to examine the effects of local economic characteristics on the rate of innovation (as measured by patents) in more than a dozen industries. The availability of human capital is perhaps the most important factor explaining the invention rate for most industries. The authors find some evidence that higher job market density is associated with more patenting in industries such as pharmaceuticals and computers. They find evidence of increasing returns with respect to city size (total jobs) for many industries and more modest effects for increases in the size of an industry in a city. This suggests that inter-industry spillovers are often at least as important as intra-industry spillovers in explaining local rates of innovation. A more competitive local market structure, characterized by smaller establishments, contributes significantly to patenting in nearly all industries. More often than not, specialization among manufacturing industries is not particularly helpful, but the authors find the opposite for specialization among service industries. Industries benefit from different local sources of R&D (academia, government labs, and private labs) and to varying degrees. |
| Keywords: | Technological innovations |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:07-28&r=tid |
| By: | Max-Peter Menzel (University of Bern, Institute of Geography, Economic Geography and Regional Studies); Dirk Fornahl (University of Karlsruhe (TH), Institute for Economic Policy Research (IWW), and Max Planck Institute of Economics, Jena) |
| Abstract: | We present a model that explains how a cluster moves through a life cycle and why this movement differs from the industry life cycle. The model is based on three key processes: the changing heterogeneity in the cluster describes the movement of the cluster through the life cycle; the geographical absorptive capacity enables clustered companies to take advantage of a larger diversity of knowledge and the stronger convergence of clustered companies compared to non-clustered companies results in a reduction of heterogeneity. We apply these processes to four stages of the cluster life cycle: emergence, growth, sustainment and decline. |
| Keywords: | cluster evolution, life cycle, heterogeneity |
| JEL: | R11 O30 L25 |
| Date: | 2007–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-076&r=tid |