ICT, Consulting and Innovative Capabilities

This paper analyzes the impact of the decision to contract ICT consulting on firms' innovative incentives. The paper develops a theoretical model and estimates some of its implications for a sample of German firms. In particular, the paper estimates the average treatment effect of the decision to contract ICT consulting on firms' innovative incentives, considering the role of endogeneity and unobserved heterogeneity in the correlated random coefficient model. The paper shows three main results. First, the theoretical model shows that ICT consulting increases aggregate incentives to innovate. This result is not corroborated by the empirical application. ICT consulting does not affect neither the probability of introducing product or process innovations nor the number of such innovations. The empirical results show that ICT consulting affects negatively the value of the introduced product and processes innovation. Second, the theoretical model suggests that low productivity firms might evidence either lower, unaffected or higher incentives to innovate. The empirical application shows that low productivity firms exhibit higher incentives to innovate. Third, although the theoretical analysis shows that the lower the productivity level the more the incentives to contract ICT consulting, the empirical evidence is inconclusive on this matter. These results suggest that firms optimize their innovations portfolio through ICT consulting. --ICT Consulting,Competition and Innovation

ICT, consulting and innovative capabilities

This paper analyzes the impact of the decision to contract ICT consulting on firms' innovative incentives. The paper develops a theoretical model and estimates some of its implications for a sample of German firms. In particular, the paper estimates the average treatment effect of the decision to contract ICT consulting on firms' innovative incentives, considering the role of endogeneity and unobserved heterogeneity in the correlated random coefficient model. The paper shows three main results. First, the theoretical model shows that ICT consulting increases aggregate incentives to innovate. This result is not corroborated by the empirical application. ICT consulting does not affect neither the probability of introducing product or process innovations nor the number of such innovations. The empirical results show that ICT consulting affects negatively the value of the introduced product and processes innovation. Second, the theoretical model suggests that low productivity firms might evidence either lower, unaffected or higher incentives to innovate. The empirical application shows that low productivity firms exhibit higher incentives to innovate. Third, although the theoretical analysis shows that the lower the productivity level the more the incentives to contract ICT consulting, the empirical evidence is inconclusive on this matter. These results suggest that firms optimize their innovations portfolio through ICT consulting

R&D Incentives, Compatibility and Network Externalities

This paper analyzes the impact of network externalities on R&D competition between an incumbent and a potential entrant. The analysis shows that the incumbent always invests more than the entrant in the development of higher quality network goods. However, the incumbent exhibits a too low level of investments, while the entrant invests too much in R&D in comparison with the social optimum. In the model entry occurs too often in equilibrium. These inefficiencies are solely due to the presence of network externalities. By choosing compatible network goods, firms do not necessarily reduce the R&D competition intensity

Dynamic R&D Incentives with Network Externalities

This dissertation analyzes the impact of network externalities on R&D competition in an oligopolistic industry. It focuses on the level of R&D investments, the social efficiency of those efforts and the role of networks compatibility. The analysis is taken under different specifications and assumptions to check the robustness of the results. It is concluded that network externalities provide an important incentive to invest in R&D but this incentive is inefficient from a social welfare point of view. These R&D investments represent a powerful mechanism to deter entry, avoid commitment problems, improve market position and affect consumers' expectations in network markets.Network Externalities; Innovation; Dynamic Games; Durable Goods

More bits - more bucks? Measuring the impact of broadband internet on firm performance

The paper provides empirical evidence for the causal impact of broadband Internet on the economic performance of German firms. Performance is measured in terms of labour productivity and realised process and product innovations. The analysis refers to the early phase of DSL expansion in Germany from 2001 to 2003, when roughly 60 percent of the German firms already used broadband Internet. Identification relies on instrumental variable estimation taking advantage of information on the availability of DSL broadband at the postal code level. The results show that broadband Internet has no impact on firms' labour productivity whereas it exhibits a positive and significant impact on their innovation activity. --labour productivity,innovation,broadband Internet

Consumer welfare and unobserved heterogeneity in discrete choice models : the value of alpine road tunnels

We investigate the sensitivity of consumer surplus estimates to parametric assumptions on individual preference heterogeneity in a discrete choice framework. We compare results from a parametric random coefficients logit model and a recently proposed nonparametric sieve estimator. In particular, we provide an assessment of the direct economic value of crossing the Alps for the European road freight sector. Using revealed preference data from a detailed survey on transalpine road freight traffic, we estimate the yearly cost of closing the Mont-Blanc Tunnel, which was closed for 3 years following a large accident in early 1999. Ultimately, our results permit the economic evaluation of security and transport policy measures affecting transalpine traffic. Our findings suggest that the way we model unobserved heterogeneity significantly affects our welfare results

Open source, ICT infrastructure and firm performance

This paper empirically studies the impact of the adoption of open source software (OSS) on firms' labor productivity and innovative behavior. Using a representative sample of German firms, the results show that the adoption of OSS operating systems for servers and general OSS applications has no impact on firm level labor productivity, while the adoption of OSS operating systems for PCs impacts labor productivity negatively. This result points to the costs associated with the implementation of open source software. Moreover, the analysis shows that the adoption of OSS operating systems for PCs has a positive effect on the value of introduced process innovations, suggesting efficiency gains by adopting a tailored ICT infrastructure. These benefits might explain the positive correlation observed between OSS operating systems for servers and PCs, and firms' R&D intensities

Considerations on partially identified regression models

Motivated by Manski and Tamer (2002) and especially their partial identification analysis of the regression model where one covariate is only interval-measured, we offer several contributions. Manski and Tamer (2002) propose two estimation approaches in this context, focussing on general results. The modified minimum distance (MMD) estimates the true identified set and the modified method of moments (MMM) a superset. Our first contribution is to characterize the true identified set and the superset. Second, we complete and extend the Monte Carlo study of Manski and Tamer (2002). We present benchmark results using the exact functional form for the expectation of the dependent variable conditional on observables to compare with results using its nonparametric estimates, and illustrate the superiority of MMD over MMM. For MMD, we propose a simple shortcut for estimation