Technology lock-in with horizontal and vertical innovations through limited R&D spending

In this paper we analyze an inter-temporal optimization problem of a representative firm that invests in horizontal and vertical innovations and that faces a constraint with respect to total R&D spending. We find that there can exist two different steady-states of the economy when the amount of research spending falls short of an endogenously determined threshold: one with higher productivities and less new technologies being developed, and the other with more technologies being created and lower productivities. But, for a higher amount of R&D spending the steady-state becomes unique and the firm produces the whole spectrum of available technologies. Thus, a lock-in effect may arise that, however, van be overcome by raising R&D spending sufficiently

Technology lock-in with horizontal and vertical innovations through limited R&D spending

Bondarev A, Greiner A. Technology lock-in with horizontal and vertical innovations through limited R&D spending. Working Papers in Economics and Management. Vol 10-2014. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2014.In this paper we analyze an inter-temporal optimization problem of a representative firm that invests in horizontal and vertical innovations and that faces a constraint with respect to total R&D spending. We find that there may exist two different steady-states of the economy when the amount of research spending falls short of an endogenously determined threshold: one with higher productivities and less new technologies being developed, and the other with more technologies being created and lower productivities. Thus, a lock-in effect may arise that, however, can be overcome by raising R&D spending sufficiently such that the steady-state becomes unique and the firm produces the whole spectrum of available technologies

Comparing nuclear power trajectories in Germany and the UK: from ‘regimes' to ‘democracies’ in sociotechnical transitions and Discontinuities

This paper focuses on arguably the single most striking contrast in contemporary major energy politics in Europe (and even the developed world as a whole): the starkly differing civil nuclear policies of Germany and the UK. Germany is seeking entirely to phase out nuclear power by 2022. Yet the UK advocates a ‘nuclear renaissance’, promoting the most ambitious new nuclear construction programme in Western Europe.Here,this paper poses a simple yet quite fundamental question: what are the particular divergent conditions most strongly implicated in the contrasting developments in these two countries. With nuclear playing such an iconic role in historical discussions over technological continuity and transformation, answering this may assist in wider understandings of sociotechnical incumbency and discontinuity in the burgeoning field of‘sustainability transitions’. To this end, an ‘abductive’ approach is taken: deploying nine potentially relevant criteria for understanding the different directions pursued in Germany and the UK. Together constituted by 30 parameters spanning literatures related to socio-technical regimes in general as well as nuclear technology in particular, the criteria are divided into those that are ‘internal’ and ‘external’ to the ‘focal regime configuration’ of nuclear power and associated ‘challenger technologies’ like renewables. It is ‘internal’ criteria that are emphasised in conventional sociotechnical regime theory, with ‘external’ criteria relatively less well explored. Asking under each criterion whether attempted discontinuation of nuclear power would be more likely in Germany or the UK, a clear picture emerges. ‘Internal’ criteria suggest attempted nuclear discontinuation should be more likely in the UK than in Germany– the reverse of what is occurring. ‘External’ criteria are more aligned with observed dynamics –especially those relating to military nuclear commitments and broader ‘qualities of democracy’. Despite many differences of framing concerning exactly what constitutes ‘democracy’, a rich political science literature on this point is unanimous in characterising Germany more positively than the UK. Although based only on a single case,a potentially important question is nonetheless raised as to whether sociotechnical regime theory might usefully give greater attention to the general importance of various aspects of democracy in constituting conditions for significant technological discontinuities and transformations. If so, the policy implications are significant. A number of important areas are identified for future research, including the roles of diverse understandings and specific aspects of democracy and the particular relevance of military nuclear commitments– whose under-discussion in civil nuclear policy literatures raises its own questions of democratic accountability

Market bundling strategies in the horizontal portal industry

The arrival of the Internet offers opportunities for both incremental efficiency gains and complete industry redefinition, presenting new value propositions and hence leading to the emergence of new businesses and industries. One particular case is that of the horizontal portal industry, such portals being consistently the most visited sites on the Web. Nevertheless, despite ongoing market concentration, overall profitability remains low. In this paper we contend that, although the industry has great potential for value creation, value appropriation in such information-based businesses remains problematic. The only way to achieve it is through cross-market bundling; that is, portals selling their products packaged with Internet access and proprietary content through system competition. We support our claims with theoretical argument and empirical evidence, analyzing the information distribution value chain in its entirety.Portals; information goods; Internet advertising; Internet service providers; content provider;

Innovation policy; Europe or the member states?

Innovation seldom has purely domestic causes and consequences, but how can a European innovation policy complement or substitute national policies? Taking the subsidiarity principle as a starting point, this report discusses the economic rationale of a European innovation policy. Explorative empirical analysis suggests that public R&D and public funding of private R&D are subject to economies of scale and external effects. This is an argument in favour of a European innovation policy but amongst other things, the heterogeneity in social economic objectives on public R&D spending between Member States pleas for national government involvement. In addition, there are scale economies in the protection of intellectual property and in the development of standards. We conclude that a European innovation policy could have, or already has, substantial benefits over purely national policy in these areas. With respect to innovation policies targeted at SMEs, we do not find economies of scale or external effects. It seems to be efficient that these policies are mainly conducted at the national level.

Increasing Dominance - the Role of Advertising, Pricing and Product Design

Despite the empirical relevance of advertising strategies in concentrated markets, the economics literature is largely silent on the effect of persuasive advertising strategies on pricing, market structure and increasing (or decreasing) dominance. In a simple model of persuasive advertising and pricing with differentiated goods, we analyze the interdependencies between ex-ante asymmetries in consumer appeal, advertising and prices. Products with larger initial appeal to consumers will be advertised more heavily but priced at a higher level - that is, advertising and price discounts are strategic substitutes for products with asymmetric initial appeal. We find that the escalating effect of advertising dominates the moderating effect of pricing so that post-competition market shares are more asymmetric than pre-competition differences in consumer appeal. We further find that collusive advertising (but competitive pricing) generates the same market outcomes, and that network effects lead to even more extreme market outcomes, both directly and via the effect on advertising

How emergence conditions of technological clusters affect their viability? Theoretical perspectives on cluster lifecycles

The widely studied concept of clusters has been usually treated as pre-established and successful structures. We argue that clusters are not pre-established but emerge through a double competition process of technological and regional nature. Moreover, faced to a changing environment they are not always successful. Their long-term evolution depends on their viability capacities. We show that viability is dependent on the emergence conditions, because different forms of emergence create clusters with different structures.cluster life cycle, emergence, viability, networks

On the role of general purpose technologies within the Marshall-Jacobs controversy: The case of nanotechnologies

This paper investigates the role of nanotechnologies as a general purpose technology for regional development. Due to pervasiveness, nanotechnologies may be utilized in diverse applications thereby providing the basis for both localization and urbanization externalities. We carry out patent and publication analyses for the city state of Hamburg during the period 1990-2010. We find evidence that nanotechnologies are advanced in the context of regional knowledge bases and follow up prevailing specialization patterns. As nanotechnologies develop both industry specific and city specific externalities become effective leading to specialization deepening and specialization widening which both are functions of the increasing nano-knowledge base. --general purpose technology,nanotechnology,specialization,diversification,Marshall-Jacobs controversy,patent and publication analysis

Lisbon Agenda, Regional Innovation System and the New EU Cohesion Policy

The EU’s cohesion policy should now be confluent with the goals of the Lisbon strategy by promoting growth and employment. In this context, the promotion of a concept called regional innovation system has recently become important in the EU for guaranteeing long-term regional economic growth. This paper attempts to explain the determinants of the varying degrees of innovation promotion by the EU from one region to another. Since regional-policy strategies should have been subject to a new orientation towards more innovation promotion, we are particularly interested in whether the EU’s co-financing policy of innovation projects changed for the 2007-2013 program period compared with the 2000-2006 period. According to our empirical analysis, which controls for various determinants of innovation promotion, there has been no significant change in the EU’s regional policy strategy in general. We confirm this result when focusing on less-developed Objective 1 regions, where we would have expected the new policy strategy to show up more pronounced in particular.Lisbon Agenda, regional innovation network, EU cohesion policy