315,241 research outputs found

    Competition and the Efficiency of Markets for Technology

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    The sale of R&D projects through licensing facilitates the division of labor between research and development activities. This vertical specialization can improve the overall efficiency of the innovative process. However, these gains depend on the timing of the sale: the buyer of an R&D project should assume development at the stage at which he has an efficiency advantage. We show that in an environment where the seller is overconfident about the value of the project, she may delay the sale to the more efficient firm in order to provide verifiable information about its quality, though this delay implies higher total development costs for the project. We obtain a condition for the equilibrium timing of licensing and examine how factors such as the intensity of competition between potential buyers influence it. We show that a wide array of different explanations, based on differences in information, beliefs or risk profiles, lead to the same qualitative results. We present empirical evidence from pharmaceutical licensing contracts that is consistent with our theoretical predictions

    Competition and the Efficiency of Markets for Technology

    Get PDF
    The sale of R&D projects through licensing facilitates the division of labor between research and development activities. This vertical specialization can improve the overall efficiency of the innovative process. However, these gains depend on the timing of the sale: the buyer of an R&D project should assume development at the stage at which he has an efficiency advantage. We show that in an environment where the seller is overconfident about the value of the project, she may delay the sale to the more efficient firm in order to provide verifiable information about its quality, though this delay implies higher total development costs for the project. We obtain a condition for the equilibrium timing of licensing and examine how factors such as the intensity of competition between potential buyers influence it. We show that a wide array of different explanations, based on differences in information, beliefs or risk profiles, lead to the same qualitative results. We present empirical evidence from pharmaceutical licensing contracts that is consistent with our theoretical predictions

    Product market reforms and productivity: a review of the theoretical and empirical literature on the transmission channels

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    Product market reforms are structural reforms of microeconomic type that aim at improving the functioning of product markets by increasing competition amongst producers of goods and services. Theoretical models suggest that regulation and reforms which liberalise or improve the functioning of markets can positively affect productivity through three different channels, namely a reallocation of scarce resources (allocative efficiency), an improvement in the utilisation of the production factors by firms (productive efficiency) and an incentive for firms to innovate to move to the modern technology frontier (dynamic efficiency). This paper reviews the theoretical and empirical literature on these three channels.product market reforms, competition, productivity, efficiency, Nicodeme, Sauner-Leroy

    Product market reforms and productivity: a review of the theoretical and empirical literature on the transmission channels

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    Product market reforms are structural reforms of microeconomic type that aim at improving the functioning of product markets by increasing competition amongst producers of goods and services. Theoretical models suggest that regulation and reforms which liberalise or improve the functioning of markets can positively affect productivity through three different channels, namely a reallocation of scarce resources (allocative efficiency), an improvement in the utilisation of the production factors by firms (productive efficiency) and an incentive for firms to innovate to move to the modern technology frontier (dynamic efficiency). This paper reviews the theoretical and empirical literature on these three channels.Productivity Product market reforms competition entry innovation

    Globalization and innovation in emerging markets

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    Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, the authors test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms'efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. They find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. The authors show that the supply chain of multinational enterprises and international trade are important channels for domestic firms'innovation. They detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.E-Business,Education for Development (superceded),Microfinance,Labor Policies,Emerging Markets

    Implementing Electricity Restructuring: Policies, Potholes, and Prospects

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    Electricity is one of the last U.S. industries in which competition is replacing regulation. We briefly review the technology for producing and delivering power, the history of electricity policy, and recent state and international experience. We then outline the major questions facing policymakers as they decide whether, when, and how to implement restructuring. We conclude with some thoughts on the California electricity crisis and other political controversies. Although the California experience has come to define what it means for electricity markets to fail, most of the problems it raised are among those we know how to solve or prevent. The still unresolved make-or-break issue remains whether the cooperation necessary to maintain reliability is compatible with the degree of competition necessary to bring about greater efficiency and lower prices. This paper draws upon our forthcoming book, Alternating Curents: Electricity Markets and Public Policy.electricity restructuring, regulation, deregulation

    Protecting Innovation: The Role of State Attorneys General in Antitrust Enforcement

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    Antitrust law was devised at the end of the 19th century. Since then, courts and regulators applying antitrust laws have developed a wide range of appallingly anticompetitive doctrines. Many of those doctrines tended to protect businesses from competitive forces, rather than the other way around. Nor were the stakes trivial: As Robert Bork insisted in his seminal work, the Antitrust Paradox (1978), many of these doctrines were "ultimately incompatible with the preservation of a liberal capitalist social order."In recent years, antitrust enforcement by state attorneys general has seen a dramatic rise. This raises several concerns: first, the potential of geographic bias that comes from state attorneys general protecting the interests of business or consumers in their states from competition; second, the potential for increased litigation and harsher penalties; and third, the duplicative nature of state antitrust enforcement, particularly in the context of parens patriae suits and pre-merger reviews. These concerns suggest that increased state involvement in antitrust enforcement could have significant negative consequences for competition and innovation. This danger is particularly acute in high-technology markets, where antitrust enforcement is already problematic in several ways. Consumers benefit from increased efficiency, but efficiency can increase market share, which in turn can trigger ill-advised antitrust enforcement. The complexity and rapid innovation of high-tech markets increase the danger of erroneous and damaging antitrust enforcement. These challenges are exacerbated by state involvement in antitrust. While we see a clear role for the states in enforcing antitrust law in local commerce, it is much more difficult to discern a role for the states in transactions that are in many cases not only national, but international. Instead, the involvement of the states in these markets is more likely to lead to an expansive regulatory regime that inhibits -- rather than enhances -- competition and innovation. This is particularly true in the case of e-commerce. This paper examines the role of states in antitrust enforcement and the impact this role can have on competition, particularly in high-tech markets. Part I provides a short summary of major antitrust laws. Part II looks at the different ways in which antitrust law is enforced. Part III provides a closer look at the role of the states in antitrust enforcement, focusing on Texas. Part IV sets forth a law-and-economics analysis of the main types of cases that are typically the subject of antitrust enforcement, with a special focus on the activity of state attorneys general. Part V provides a close look at antitrust enforcement in high-tech markets. Part VI makes recommendations for improvement.This paper argues for a continued effort to understand how markets work, and for revision of antitrust laws and judicial doctrines in light of those insights. We argue that the scope of state antitrust enforcement should be reduced, particularly with respect to interstate and high technology markets. Specifically, we recommend that states' ability to bring parens patriae suits under the federal antitrust laws should be repealed, and that state involvement in premerger review should be curtailed. We also find that where the federal government has settled an antitrust matter under investigation, continued state involvement makes little sense, and in fact may stifle product development, investment and innovation

    The impact of globalisation and trade on the productivity performance of the Irish food manufacturing sector

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    Globalisation and international integration can yield efficiency gains through the promotion of competition and trade in markets for internationally traded goods. At the firm level, exposure to competitive pressures has created a necessity for firms to operate as close as possible to the technology frontier in order to survive. Furthermore, increased integration has lead to an influx of investment by Multinational corporations who bring with them technological innovations. This has the effect of improving overall productivity by shifting the best practice technology frontier while at the same time making it increasingly difficult for smaller competitors to survive. In an Irish context, the food industry has recently been acknowledged in national policy as an important sector for future development. The aim of this paper is to measure the productivity performance of the food processing industry in Ireland and establish the extent to which globalisation has brought about efficiency and productivity gains to the industry.Food Industry, Ireland, Productivity, Stochastic Production Function

    Market competition and innovation in Luxembourg

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    This paper studies the empirical relation between market competition and innovation using Luxembourg's Structural Business Statistics. The competitive pressure in Luxembourg's markets is assessed by computing a prot elasticity measure, based on the idea of cost-efficiency. From this, the paper analyses the relation between competition and innovation performance by estimating an equation for the determinants of R&D expenditure. The results show that Luxembourg's industries are characterised by low levels of competition intensity, especially in markets relevant to competition policy and regulation. The relation between competition and innovation is non-linear and depends crucially on the efficient use of inputs to production. The impact of the distribution of technological efficiency on innovation is assessed by measuring both average technology gap and technology spread. The innovation effort is increasing as industries are closer to the frontier, and decreasing in the technology spread

    An Empirical Analysis of Productivity Developments in "Traditional Banks" : The Initial Post-Liberalization Experience

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    By utilizing a non-parametric Malmquist index approach, we investigate the initial changes in the productivity and efficiency of the “traditional” Turkish banks in an era of financial liberalization (1980-1990). We hypothesize that the new liberal environment along with heightened competition from new banks coming from internal and external markets will discipline the traditional banks that are coming from the pre-liberalization period in resource management to economize their production inputs and/or in looking for new ways to expand their financial outputs, resulting in higher productivity and efficiency in these banks. Consistent with the expectations, we found that there is a significant upward trend in the productivity and efficiency of the traditional Turkish banks over the period under study. On the other hand, the results also indicate that the production technology of these banks has not advanced as expected. It appears that productivity growth in traditional Turkish banks mainly stems from the efforts of inefficient banks to catch up with the leading banks (efficiency increase) rather than the expansion of production frontier by the leading banks (technological progress).Traditional Banks, Productivity, Efficiency, Liberalization, Malmquist Index
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