Union structure and firms incentives for cooperative R&D investments

We examine how different unionisation structures and the spillovers of R&D activities affect R&D investments and firms’ incentives to form a Research Joint Venture. We find that whenever firms invest non-cooperatively, an industry union increases R&D investments, if industry specific spillovers are low. In case of a Research Joint Venture, investments are always higher under firm-level unions. We also find that firms’ incentives to form a Research Joint Venture are stronger when they face an industry union, if spillovers are low. Rigidities in the labour market, such as high unemployment benefits or/and a central union, have negative effects on employment, output and profits and hinder the diffusion of the efficiency created by a RJV to consumers and employees. Integrated labour market and R&D policies are also discussed.Trade Unions; Oligopoly; Process Innovations

Anticompetitive Contracts in the U.K. Pay-TV Market

contracts, raising rivals costs, pay TV

Allocative and Informational Externalities in Auctions and Related Mechanisms

We study the effects of allocative and informational externalities in (multi-object) auctions and related mechanisms. Such externalities naturally arise in models that embed auctions in larger economic contexts. In particular, they appear when there is downstream interaction among bidders after the auction has closed. The endogeneity of valuations is the main driving force behind many new, specific phenomena with allocative externalities: even in complete information settings, traditional auction formats need not be efficient, and they may give rise to multiple equilibria and strategic non-participation. But, in the absence of informational externalities, welfare maximization can be achieved by Vickrey-Clarke- Groves mechanisms. Welfare-maximizing Bayes-Nash implementation is, however, impossible in multi-object settings with informational externalities, unless the allocation problem is separable across objects (e.g. there are no allocative externalities nor complementarities) or signals are one-dimensional. Moreover, implementation of any choice function via ex-post equilibrium is generically impossible with informational externalities and multidimensional types. A theory of information constraints with multidimensional signals is rather complex, but indispensable for our study

Paying for Performance in Hospitals

A frequent form of pay-for-performance programs increase reimbursement for all services by a certain percentage of the baseline price. We examine how such a ?bonus-for-quality? reimbursement scheme a¤ects the wage contract given to physicians by the hospital management. To this end, we determine the bonus inducing hospitals to incentivize their physicians to meet the quality standard. Additionally, we show that the health care payer has to complement the bonus with a (sometimes negative) block grant. We conclude the paper relating the role of the block grant to recent experiences in health care market.Paying-for-Performance; Quality; Hospital Financing

Exclusivity as Inefficient Insurance

It is well established that an incumbent firm may use exclusivity contracts so as to monopolize an industry or deter entry. Such an anticompetitive practice could be tolerated if it were associated with sufficiently large efficiency gains, e.g. insuring buyers against price volatility. In this paper we study the trade-off between positive effects (risk sharing) and negative effects (exclusion) of exclusivity contracts. We revisit the seminal model of Aghion and Bolton (1987) under risk-aversion and show that although exclusivity contracts induce optimal risk-sharing, they can be used not only to deter the entry of a more efficient rival on the product market but also to crowd out financial investors willing to insure the buyer at competitive rates. We further show that in a world without financial investors, purely financial bilateral instruments, such as forward contracts, achieve optimal risk sharing without distorting product market outcomes. Thus, there is no room for an insurance defense of exclusivity contracts.exclusivity;contracts;monopolization;risk-aversion;risk-sharing;damages

Accounting and Labour Control at Boulton and Watt, c. 1775-1810

The paper offers a new perspective on the management and accounting practices at this pioneering firm of the British industrial revolution. Using a historical materialist approach, it offers an alternative to the economic rationalist, Foucauldian and Marxist explanations in the prior literature. Based on preliminary archival research, it shows how the business practices of Boulton and Watt reflected the norms of the eighteenth century and before rather than overtly capitalist methods and used accounting to solve the problems of pricing their product and the supervision and control of labour

Complexity of Networks (reprise)

Network or graph structures are ubiquitous in the study of complex systems. Often, we are interested in complexity trends of these system as it evolves under some dynamic. An example might be looking at the complexity of a food web as species enter an ecosystem via migration or speciation, and leave via extinction. In a previous paper, a complexity measure of networks was proposed based on the {\em complexity is information content} paradigm. To apply this paradigm to any object, one must fix two things: a representation language, in which strings of symbols from some alphabet describe, or stand for the objects being considered; and a means of determining when two such descriptions refer to the same object. With these two things set, the information content of an object can be computed in principle from the number of equivalent descriptions describing a particular object. The previously proposed representation language had the deficiency that the fully connected and empty networks were the most complex for a given number of nodes. A variation of this measure, called zcomplexity, applied a compression algorithm to the resulting bitstring representation, to solve this problem. Unfortunately, zcomplexity proved too computationally expensive to be practical. In this paper, I propose a new representation language that encodes the number of links along with the number of nodes and a representation of the linklist. This, like zcomplexity, exhibits minimal complexity for fully connected and empty networks, but is as tractable as the original measure. ...Comment: Accepted in Complexit

Industry concentration and strategic trade policy in successive oligopoly

We study a policy game between exporting and importing countries in vertically linked industries. In a successive international Cournot oligopoly, we let the governments in the importing and exporting countries use tax instruments strategically to shift rents up or down the vertical value-chain. We show that the equilibrium outcome depends crucially on the relative degree of competitiveness in the upstream and downstream parts of the industry. With respect to national welfare, a more competitive upstream industry may benefit an exporting (upstream) country while harming an importing (downstream) country. On the other hand, a more competitive downstream industry may harm exporting countries.Successive oligopoly; strategic trade policy; industry concentration.