Advertising and the evolution of market structure in the US car industry

This paper focuses on a single simple stylized fact which stands out from the post-war history of the US car industry, namely that industry concentration fell just at the same time as industry advertising expenditures rose sharply. Since both events were almost certainly caused by the entry and market penetration of (largely) foreign owned car producers, this stylized fact raises interesting questions about whether – and if so, how – advertising affects entry. We use a model of consumer switching behaviour to help interpret the facts. The model predicts a simple linear association between market and advertising shares (which we observe fairly clearly at two different levels of aggregation in the data), and provides the basis for arguing that advertising can facilitate entry, but only for finite periods of time

On the international diversification of production

This thesis is concerned with rigorously formalizing and testing a particular model of foreign investment, the so-called 'portfolio model'. As such, it is an exercise in positive economics - rigorous model specification coupled with direct empirical testing. The exercise can be conceptually separated into four stages. In the first place, consideration must be given to the reasons for using the model and the limitation on its applicability. This is the principal subject matter of the first chapter. Having cleared this ground, the model must be formulated and tested. It is here that previous attempts to test the model have been most disappointing. In Chapter II, we shall set out the model rigorously and generate an estimating technique to deal with the simultaneous equations system the model generates. The third step in our examination of the portfolio model is the assessment of the results and this merges with the final step of taking these results and using them for further explorations on multinational firms. As it turns out, the model does not command support from the data and the process of assessing the reasons for failure involve the last three chapters. However, an alternative model emerges directly from examination of the portfolio model and some attention is paid to this evolution and the close links between the models. Thus, in a sense, the thesis results are a purely negative affair - i.e. after a reasonably close examination, the portfolio model is put on one side. The reasons for failure and the beginnings of an alternative model are the positive results which emerge but, in the end, we are not left with a full blown rigorous model which we can put some confidence in. While not glorious and exhilarating, it is still progress

Intellectual Property Rights, Competition Policy and Innovation: Is There a Problem?

Paper presented by Geroski to the "IP, Competition and Human Rights" expert meeting held in 2004

Business experience and start-up size: buying more lottery tickets next time around?

This paper explores the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show similar results, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 50%. Instrumental variable QTE estimates are even higher, although there are concerns about the validity of the instrument

Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions

New drug introductions are key to growth for pharmaceutical firms. However, not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm’s business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small- and medium-sized businesses