Preemptive acquisition and downgrading innovation.

Research papers on innovation activity share the view that whenever an invention is made available by a startup innovator, getting its ownership by acquisition is beneficial for incumbent firms. In this note, I show by means of an example that there are some circumstances in which accomodating entry and competing with the innovator in the product market can be substantially more profitable than blocking her entry via acquisition.INNOVATION, VERTICAL DIFFERENTIATION, NATURAL DUOPOLY

Public Utilities: Privatization without Regulation

In the last decades, transitional countries of Central and Eastern Europe have engaged in strong privatization programs of public utilities. However, a large part of them did not meet legal and economic conditions needed for a market economy to take place. In this paper, we study how a firm producing a public utility and moving from a public ownership to privatization and thus adopting a profit-maximizing criterion defines its production plans, when an appropriate regulatory environment is still lacking.Privatization, public utilities, dynamic programming

Product innovation and market acquisition of firms

The paper explores the incentives for an incumbent firm to acquire an entrant willing to sell a product innovation, rather than openly compete with this entrant and, in case of acquisition, the incentives to sell simultaneously both the existing products and the new one, rather than specializing on a single variant. We prove that, in some circumstances, an incumbent firm can find it profitable to make an acquisition proposal to the entrant in order to deter entry. Nevertheless, in this acquisition scenario, a product proliferation strategy is never observed at equilibrium. Rather, the incumbent restricts itself to offer either its own variant or the product innovation produced by the entrant, depending on the quality differential existing between them. It follows that, while being available for sale, sometimes the innovation simply remains unexploited

Timing of Investment and Dynamic Pricing in Privatized Sectors.

Firms in equipment-intensive sectors, where investment in production is performed at diminishing marginal cost, spend billions of dollars in equipment and production capacity. Typically, this expenditure is induced by either the replacement of existing equipment, which deteriorates with age and can result in higher operating costs and lower production capacity, or further investment, to benefit from any technological improvement embedded in new equipment. We identify the optimal price policy, and the ensuing optimal sequence of investment timing a privatized firm selects through time and compare them with choices made at the time when such a type of firm was under public-ownership.planning investment; dynamic programming; economic behavior; privatization

Essay in R&D, investment and growth.

This thesis centres around the issue of R&D, investment and growth: it is mainly concerned with the rationale which shapes the optimal investment pattern defined by a firm over time in a growing economy. We start considering the economy as a whole in order to evaluate how its actual functioning (interaction between research labs, risk of failure in innovating, patent laws and so on) shapes firms' specific investment policies. More precisely, we focus on the R&D process as it really develops in the market, and examine what is the optimal investment policy for firms involved in research and whether the selected investment policy in turn sustains the growth path of the economy. After analysing how the economic environment may affect firms' investment plans, we propose to identify the decision mechanism, as it develops inside the firm, through which an investment policy is defined over time. Thus, we move to an in-depth analysis of the process through which a profit-maximizing entity selects a specific investment policy when it is required to expand its production plant in order to satisfy a growing economy.Cette thèse porte sur les questions de recherche et développements, d'investissement et de croissance : elle concerne principalement les raisons qui définissent au cours du temps l'investissement optimal dans une économie en croissance. Dans un premier temps, on considère l'économie dans sa globalité pour évaluer dans quelle mesure son fonctionnement actuel (interaction entre les laboratoires de recherches, risques d'échecs de innovations, licences, etc…) détermine les politiques d'investissement spécifiques des firmes. Plus précisément, l'analyse porte sur le processus de R and D qui se développe sur le marché et sur la politique d'investissement optimal pour des firmes impliquées dans la recherche. A son tour est analysée si la politique d'investissement sélectionnée soutient la croissance de l'économie. Dans un second temps, suite à l'analyse des effets de l'environnement économique sur les plans d investissement des firmes, nous proposons d'identifier le mécanisme décisionnel qui se développe à l'intérieur de la firme à partir duquel une politique d'investissement est définie dans le temps. Ainsi, nous présentons une analyse détaillée du processus à partir duquel une entité poursuivant la maximisation de son profit sélectionne une politique d'investissement particulière lorsqu'elle doit accroître sa production dans le but de satisfaire à l'économie en croissance.R&D cooperation; Plant size;

A note on acquisition of complements in a vertically differentiated market

This note is concerned with the effects of joint ownership of complements when they are vertically differentiated. We provide strong arguments for the positive nature of network integration among firms, while showing at the same time that, in some circumstances, anti-competitive consequences can be observed under acquisition

To acquire, or to compete? An entry dilemna

In this paper we address the following question: is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete? We illustrate the answer by considering competition in the banking sector.Vertical differentiation, entry, banking competition

Did the entry of low cost companies foster the growth of strategic alliances in the airline industry?

In this paper we adopt a vertical differentiation model to study the effect of deregulation in the airline industry. In particular, we focus on the entry of low cost companies, which succeed in providing essential flight services at relatively cheap prices. We argue that the entry of very aggressive rivals pushed traditional carriers to react by forming strategic alliances and exploit economies of densities trough hub-and-spoke systems. We verify that a strategic alliance is profitable if the gain in terms of economies of density is sufficiently high and consumers’ utility is not significantly decreased by the indirect connection

Innovazione commerciale ed effetti di rete: quali implicazioni di politica industriale?

Sebbene il miglioramento qualitativo di prodotto e servizi alla clientela sia da tempo ritenuto un fattore determinante per un riposizionamento di mercato, in Italia attività private di R&S si sono tradotte in larga parte in acquisizione di macchinari. Neppure la necessità di un sostegno pubblico ad innovazioni che agiscano sulla qualità di prodotto, ormai riconosciuta, ha modificato gli indirizzi delle politiche per l'innovazione, largamente incentrate su innovazioni di processo. Interessante a riguardo, e in controtendenza rispetto alla nostra, è l'esperienza svedese. Obiettivo di questo lavoro é considerare un meccanismo di intervento pubblico per l'innovazione che rafforzi il ruolo privato nella ricerca e indirizzi le attività di R&S all'acquisizione di vantaggi competitivi.innovazione; effetti incrociati di rete; politica industriale