Knowledge Transfer in Buyer-Supplier Relationships – When It (Not) Occurs

Abuyer’s technical knowledge may increase the efficiency of its supplier.Suppliers, however, frequently maintain relationships with additional buyers. Knowledge disclosure then bears the risk of benefiting one’s own competitor due to opportunistic knowledge transmission through the common supplier. We show that in one-shot relationships no knowledge disclosure takes place because the supplier has an incentive for knowledge transmission and, in anticipation of this outcome, buyers refuse to disclose any of their knowledge. In repeated relationships knowledge disclosure is stabilized by larger technological proximity between buyers and suppliers and destabilized by the absolute value of the knowledge.Knowledge Transfer, Knowledge Spillovers, Cooperation, Innovation, Repeated Games

Knowledge Disclosure and Transmission in Buyer–Supplier Relationships

Knowledge disclosure, Spillovers, Innovation, Repeated games, O31, O32, L13, L20,

Access regulation and investment in next generation networks -- A ranking of regulatory regimes

This paper analyses how different types of access regulation to next generation networks affect investments and consumer welfare. The model consists of an investment stage with uncertain returns and subsequent quantity competition. The access price is a function of investment costs and the regulatory regime. A regime with fully distributed costs or a regulatory holiday induces highest investments, followed by risk-sharing and long run incremental costs regulation. Simulations indicate that risk-sharing creates most consumer welfare, followed by regimes with fully distributed costs, regulatory holiday and long run incremental costs, respectively. Risk-sharing benefits consumers as it combines relatively high ex-ante investment incentives with strong ex-post competitive intensity.Regulation Competition Telecommunications Broadband Strategic investment

Why Powerful Buyers finance Suppliers’ R&D

It is a common concern that pricing pressure by powerful buyers discourages suppliers' R&D investments. Employing a simple monopsonist - competitive upstream industry - framework, this paper qualifies this view in two respects. First, the monopsonist has an incentive to subsidize upstream R&D which yields more upstream R&D and higher profits in both industries than the monopsonist's commitment to higher prices. Secondly, in the presence of intra-industry R&D spillovers between upstream firms, the monopsonist has an even stronger incentive to finance upstream R&D. If the monopsonist finances more than fifty percent of suppliers R&D efforts, R&D investments in upstream industry will be higher than in the case of buyer competition.Vertical Relationships, Monopsony, Buyer Power, R&D, Knowledge Spillovers

On the competitive effects of mobile virtual network operators

Mobile virtual network operators (MVNOs) offer mobile telecoms services by purchasing capacity from mobile network operators (MNOs) and competing with the latter at the retail level. This paper employs a two stage model and analyses to what extent MVNOs may exert a competitive constraint on MNOs. In the first stage MNOs determine both their wholesale and retail capacities. In the second stage MNOs and MVNOs compete in the retail market. It is found that MNOs host MVNOs if and only if the latter do not exert a competitive constraint on MNOs' retail businesses. Thus, absent access regulation, MVNO entry may happen but is unlikely to reduce consumer prices. The results do not depend upon the scarcity of capacity.Competition Mobile telecommunication MVNO Regulation

Access regulation and investment in next generation networks: A ranking of regulatory regimes

This paper analyses how different types of access regulation to next generation networks affect investments and consumer welfare. The model consists of an investment stage with uncertain returns and subsequent quantity competition. The access price is a function of investment costs and the regulatory regime. A regime with fully distributed costs or a regulatory holiday induces highest investments, followed by risk-sharing and long-run-incremental cost regulation. Risk-sharing creates most consumer welfare, followed by regimes with fully distributed costs, long-run-incremental costs and regulatory holiday, respectively. Risk-sharing benefits consumers as it combines relatively high ex-ante investment incentives with strong ex-post competitive intensity.regulation, competition, telecommunications, broadband, strategic investment

Market definition of broadband internet in Slovakia: are fixed and mobile in the relevant market?

This paper uses a rich survey of 6,446 households in Slovakia to estimate price elasticities of demand for Internet access, and draw implications for market definition. We estimate a mixed logit model, in which households choose between different broadband technologies: DSL, cable modem, fibre, WiFi and mobile. We find that a number of household characteristics influence the technology choices, and there is also significant unobserved heterogeneity. Demand for Internet access is highly price sensitive. The price elasticity of demand for DSL is -3.02, which falls in the middle of the range of elasticities for the other technologies. Furthermore, the price elasticity of demand at the level of all fixed broadband technologies (DSL+cable modem+fibre+WiFi) is equal to -1.98. For a reasonable range of profit margins, this estimate implies that mobile broadband should be included in the relevant antitrust market of fixed broadband. Our findings have implications for competition policy in Central and Eastern European countries where due to poor copper networks mobile broadband is an important alternative to fixed broadband.publisher: Elsevier articletitle: Market definition for broadband internet in Slovakia – Are fixed and mobile technologies in the same market? journaltitle: Information Economics and Policy articlelink: http://dx.doi.org/10.1016/j.infoecopol.2014.06.002 content_type: article copyright: Copyright © 2014 Elsevier B.V. All rights reserved.status: publishe

Cooperation or competition in R&D when innovation and absorption are costly

This article analyzes cost-reducing R&D investments by firms that behave non-cooperatively or cooperatively. Firms face a trade-off between allocating their R&D investments to innovate or to imitate (absorb). We find that the non-cooperative behavior not only induces more imitation (absorption) but also, for the most part, more innovation investments. Only the cooperative behavior, however, ensures that R&D investments are allocated efficiently to innovation and to imitation (absorption) in the sense that any given amount of industry-wide cost reduction is obtained for the minimum overall R&D costs.Absorptive capacity, Cooperation, Spillovers, Innovation, Imitation, R&D,