The economics of IPR protection policies

In this paper, we model competition between legal and pirate products. In our framework, the government affects this competition through police spending and taxes on legal products. Therefore, the government can choose the combination of spending and taxes that best fits its goals. We find that governments that focus entirely on eradicating piracy use lower levels of taxes and police spending than governments that focus on maximizing consumption, consumer surplus, welfare or government size. This result highlights the importance of demand side policies in the fight against piracy and posts a challenge to the traditional solo approach of supply side policies.piracy; pirate products; intellectual property rights; illegal copying; demand side policies;

Vertical Integration, Exclusivity and Game Sales Performance in the U.S. Video Game Industry

This paper empirically investigates the relation between vertical integration and video game performance in the U.S. video game industry. For this purpose, we use a widely used data set from NPD on video game montly sales from October 2000 to October 2007. We complement these data with handly collected information on video game developers for all games in the sample and the timing of all mergers and acquisitions during that period. By doing this, we are able to separate vertically integrated games from those that are just exclusive to a platform First, we show that vertically integrated games produce higher revenues, sell more units and sell at higher prices than independent games. Second, we explore the causal effect of vertical integration and find that, for the average integrated game, most of the difference in performance comes from better release period and marketing strategies that soften competition. By default, vertical integration does not seem to have an effect on the quality of video game production. We also find that exclusivity is associated with lower demand.No; keywords

Vertical Integration, Exclusivity and Game Sales Performance in the U.S. Video Game Industry

This paper empirically investigates the relation between vertical integration and video game performance in the U.S. video game industry. For this purpose, we use a widely used data set from NPD on video game montly sales from October 2000 to October 2007. We complement these data with handly collected information on video game developers for all games in the sample and the timing of all mergers and acquisitions during that period. By doing this, we are able to separate vertically integrated games from those that are just exclusive to a platform First, we show that vertically integrated games produce higher revenues, sell more units and sell at higher prices than independent games. Second, we explore the causal effect of vertical integration and find that, for the average integrated game, most of the difference in performance comes from better release period and marketing strategies that soften competition. By default, vertical integration does not seem to have an effect on the quality of video game production. We also find that exclusivity is associated with lower demand.vertical integration, exclusivity, performance, video games

TESTING THE EFFICIENCY OF MARKETS IN THE 2002 WORLD CUP

Trading data from the gambling market for the 2002 World Cup provide a unique window through which to test theories of market efficiency.  This market provides many of the benefits of a laboratory experiment, but with much higher stakes, experienced participants, and a naturally-occurring environment.  The primary drawback of the data is the relatively small number of trades.  The evidence concerning market efficiency is mixed.  Although markets respond strongly to goals being scored, there is some evidence that prices continue to trend higher for 10-15 minutes after a goal.  We also observe systematically negative returns for bets on the pre-game favorite, consistent with the biases seen in wagering on other sports.  We document the endogenous emergence of market makers.  These market makers are involved in a large share of trades.  Increasing from two active market makers to five or more market makers does not appear to improve the functioning of the market.  On average, the market makers earn slightly negative returns, implying that other traders are able to identify situations in which market makers are setting inefficient price

The Organizational Implications of Creativity: The US Film Industry in Mid-XXth Century

We develop a basic framework to understand the organization of highly creative activities. Management faces a fundamental tradeoff in organizing such activities. On the one hand, since creativity cannot be achieved by command and control or by monetary incentives, internal/contractual production of creative products is plagued by hazards arising from their fundamental characteristics: extremely high input, output and market uncertainty, and the inherent informational advantages of creative talent. Procuring highly creative products in the market place, though, exposes the distributor to a fundamental risk: independently produced creative goods are generic distribution-wise. Thus, in procuring creative products in the marketplace, distributors face the unavoidable winner's curse risk. Since this risk is, to a large extent, independent of the creative nature of the product, the higher the creative content, the higher the relative hazards associated with internal or contractual production. Thus, internal/contractual production of creative goods will tend to be less prevalent the higher the creative content associated with its production. We apply this insight to the evolution of the U.S. film industry in the mid-XXth century. We exploit two simultaneous natural experiments -- the diffusion of TV and the Paramount antitrust decision forcing the separation of exhibitors from distributors and prohibiting the use of block-booking. Both events increased the demand for creative content in movies. We develop empirical implications which we test by analyzing in detail the decision by distributors to produce films internally or to procure then in the market place, in the face of an increase in the demand for creative content.

Internally produced games outperform those produced by outsourced developers in the U.S. video game industry

In the last two decades video games have grown into a multibillion dollar industry, with titles and franchises that rival the film industry in terms of revenues. Ricard Gil takes a close look at how producing a game in-house, rather than via a developer, can increase games’ consumer performance. He argues that this stems from such ‘integrated’ games being perceived as being higher quality, and being distributed more strategically

Vertical integration and product market competition: Evidence from the Spanish local TV industry

This paper empirically examines the relation between product market competition and vertical integration in the Spanish local TV industry. For this reason, I use a data set of Spanish local TV stations that provides station level information on vertical integration and product market competition, as well as other station and market characteristics, for the years 1996, 1999 and 2002. During this period, changes in regulation in this industry had a strong impact on the level of market competition faced by local TV stations. I use differences in market structure across markets and years to empirically study the relation between vertical integration and competition. My results show that there exists a negative relation between vertical integration and market competition. I also find that despite the fact that private stations are less likely to integrate content production, they are more likely to do so the higher the number of competing stations in their coverage area. Private stations do so because by increasing the percentage of content produced in-house they differentiate themselves from competition and therefore soften competition and maximize profits.market competition; local TV Industry; product; vertical integration;

Does regulation drive market competition? Evidence from the Spanish local TV industry

This paper empirically examines whether regulation decreases market competition. For this purpose, I use data from Spanish local TV stations for 1996, 1999 and 2002. During this period of time, this industry transitioned from a state of alegality (no regulation in place whatsoever), to being highly regulated and finally to being liberalized. I estimate station population entry thresholds by number of entrants across years to proxy by the nature of competition by determining the necessary market size to sustain an extra station. I find that stations soften competition the most under no regulation and they seem to compete the hardest when highly regulated. I explain in the paper that, even though this is at odds with previous literature, this result is explained by the industry institutions, its low profitability and the nature of the first regulation and its consequent liberalization.regulation; market; competition; TV industry; liberalization;

The determinants of changes in the organization of production: Evidence from Spanish plant-level data

In this paper we empirically examine the determinants of changes in the organization of production using detailed information on a data set from a new plant-level survey of 1003 plants covering the full range of manufacturing industries in Spain. In particular, and among many other things, survey respondents were asked how service outsourcing practices had changed in the last three years. The answer to this question is indicative of the changes in the importance of backward integration for each of the plants studied. Using other information provided in the survey, we relate the reported changes in outsourcing to changes in other relevant dimensions as possible determinants of the boundaries of the firm. These dimensions are: plant size, downstream market power, cost of inputs, price and quality of the final good and technological progress. Our findings show that outsourcing increases are strongly positively correlated with increases in market share and in market competition. We also find that outsourcing increases when plants face simultaneous increases in product quality and product prices and that it decreases when plants face simultaneous increases in market share and market competition. Finally, we find that multi-plant and one-plant firms adjust their outsourcing practices differently to outside changes. Since neither TCE nor PRT theories of vertical integration fully explain the patterns found in our data, we close this paper by following Adam Smith's claim that the extent of the market seems to be the only factor consistently limiting the degree of specialization in our setting.outsourcing; vertical integration; competition; manufacturing plants;

Why Did Firms Practice Segregation? Evidence from Movie Theaters during Jim Crow

Racial segregation by businesses during Jim Crow was often voluntary and practiced without a legal mandate. Voluntary segregation can be driven by profit-motivated business owners catering to racist white customers or discrimination by business owners. We assess the relative importance of customers’ and firms’ discrimination by examining the 1953 desegregation of Washington, DC, movie theaters, which occurred rapidly because of a Supreme Court ruling affecting only businesses in Washington. Using weekly data for a nationwide sample of theaters, we find that revenues of Washington theaters fell relative to other theaters, consistent with reduced demand from biased white customers. We use a test for firms’ discrimination based on a model of the screening decision for films with black actors cast in prominent roles. We cannot reject that the run length of these films was profit motivated. Together, our results point toward customer discrimination as a primary cause of public accommodation segregation