Host-country Absorption of Technology: Evidence from Automotive Supply Networks in Eastern Europe

This paper provides an analysis of technology transfer in automotive supply networks in six EU candidate countries with important vehicle (component) industries. We survey more than 400 firms, representing roughly half of the automotive supply industry. In addition, we have in-depth information from 39 case studies. We address the generation, the origin, and the quality of technology transfer. In terms of generation, we look at the determinants of who receives technology along the value chain, and who passes it on. In terms of origin, we compare local and foreign-owned firms and those with mixed ownership. We also compare differences across the countries. In terms of quality, we discuss the change-inducing effects of technology as perceived by recipient firms. Our results confirm the salience of networks and the key role of MNCs for the generation and diffusion of technology. We also find that diffusion of technology happens within the countries so that host countries absorb more technology than is immediately apparent and commonly believed.

Asymmetric Adjustment in Menu Cost Duopoly

Contrary to existing menu cost models we assume oligopolistic interaction. Symmetric duopoly may lead to asymmetric adjustment even when menu costs are negligible: In some equilibria only one firm adjusts to negative shocks, while both firms adjust to positive shocks.Menu costs, Bertrand duopoly, asymmetric adjustment