Entrepreneurial Finance and the Flat-World Hypothesis: Evidence from Crowd-Funding Entrepreneurs in the Arts

We examine the geography of early stage entrepreneurial finance in the context of an internet marketplace for funding new musical artist-entrepreneurs. A large body of research documents that investors in early-stage projects are disproportionately co-located with the entrepreneur. Theory predicts this will be particularly true of artist-entrepreneurs with preliminary-stage projects, difficult-to-contract-for effort, difficult-to-observe creativity, negligible tangible assets, and limited reputations. At the same time, however, observers of the spatial effects of the internet and related technologies report that many economic activities have become much less geographically dependent. At an aggregate level, the internet marketplace we examine does indeed demonstrate a spatial transformation of the entrepreneurial finance process: the average distance between investors and artist-entrepreneurs is 4,831 km. However, geography still matters; investors are disproportionately likely to be local and, conditional on investing, local investors invest more. This apparent role for proximity is strongest before entrepreneurs visibly accumulate capital. Within a single round of financing, local investors are more likely to engage earlier in the funding cycle. However, this difference in the timing of investment is almost entirely explained by a particular type of investor, whom we characterize as 'family, friends, and fans.' We conjecture that these individuals, who are disproportionately co-located with the entrepreneur, have offline information about the entrepreneur and therefore derive less new information from observing the aggregate financing raised. We speculate that the path-dependent role of this offline network in conveying information to the online community limits the 'flat world' potential of these communication technologies

Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market

This paper investigates the scope of indirect network effects in the home video game industry. We argue that the increasing prevalence of non-exclusive software gives rise to indirect network effects that exist between users of competing and incompatible hardware platforms. This is because software non-exclusivity, like hardware compatibility, allows a software firm to sell to a market broader than a single platform's installed base, leading to a dependence of any particular platform's software on all firms' installed bases. We look for evidence of these market-wide network effects by estimating a model of hardware demand and software supply. Our software supply equation allows the supply of games for a particular platform to depend not only on the installed base of that platform, but also on the installed base of competing platforms. Our results indicate the presence of both a platform-specific network effect and -in recent years- a cross-platform (or generation-wide) network effect. Our finding that the scope of indirect network effects in this industry has widened suggests one reason that this market, which is often cited as a canonical example of one with strong indirect network effects, is no longer dominated by a single platform

Who thinks about the competition? Managerial ability and strategic entryin US local telephone markets

This paper examines how manager and firm characteristics relate to entry decisions in US local telephone markets. To do so, it develops a structural econometric model that allows managers to be heterogeneous in their ability to correctly conjecture competitor behavior. The model adapts Camerer, Ho, and Chong's (2004) Cognitive Hierarchy model to a real-world setting. We observe the industry in 1998, shortly after the Telecommunications Act of 1996 opened up the market. We find that older firms with older, more experienced managers have higher estimated levels of strategic ability. Managers with degrees in economics or business, and managers with graduate degrees, also have higher estimated levels of strategic ability. We find no evidence that university quality is related to ability. We repeat this exercise using data from 2000, 2002, and 2004. While the core results do not change, the overall level of measured strategic ability increases substantially by 2004. The estimates of strategic ability are also correlated with survival: those firms with lower estimated levels of ability are more likely to exit the industry early

Patents and the Performance of Voluntary Standard Setting Organizations

This paper measures the technological significance of voluntary standard setting organizations (SSOs) by examining citations to patents disclosed in the standard setting process. We find that SSO patents are cited far more frequently than a set of control patents, and that SSO patents receive citations for a much longer period of time. Furthermore, we find a significant correlation between citation and the disclosure of a patent to an SSO, which may imply a marginal impact of disclosure. These results provide the first empirical look at patents disclosed to SSOs, and show that these organizations not only select important technologies, but may also play a role in establishing their significance

Search Engine Advertising: Pricing Ads to Context

Each search term put into a search engine produces a separate set of results. Correspondingly, each of the sets of ads displayed alongside the results is priced using a separate auction. We investigate how bids for these context-based ads depends on the difficulty of making a match. This contrasts with the existing literature that focuses on the effect of match quality. We examine advertising prices paid by lawyers for 139 Google search terms in 195 locations. Other things being equal, the fewer searches there are on a term, the higher the price. To identify a causal relationship between match-difficulty and prices paid, we exploit a natural experiment in 'ambulance-chaser' regulations across states. When lawyers cannot contact a client by mail and matching becomes more difficult, the relative price per ad click is $0.93 higher. We check the robustness of this result by performing a falsification test using a different ambulance-chaser regulation. Our results suggest that prices are higher for context-based ads when the difficulty of both online and off-line matching increases. This highlights that a major reason why search advertising is profitable is because its use of context can monetize the 'long tail' by reducing friction in the matching process

External review of IDRC's Food, Environment, and Health (FEH) Program 2015-2020 : final report

This detailed summative evaluation provides evidence and recommendations regarding how to improve effectiveness in IDRC’s Food, Environment and Health (FEH) strategic body of research programming across Latin America and the Caribbean (LAC) countries, as well as Africa, Asia, and the Middle East. Evaluation findings cover: program strategy; strategic issues; programmatic outcomes; and knowledge management, monitoring and evaluation. It is recommended that the IDRC protects program coherence towards enhancing outcomes by reducing the number of thematic aims

What's in a (Missing) Name? Status and Signaling in Open Standards Development

How much are we influenced by an author's identity? If identity matters, is it because we have a 'taste for status' or because it offers a useful shortcut — a signal that is correlated with the likely importance of their ideas? This paper presents evidence from a natural experiment that took place at the Internet Engineering Task Force (IETF) — a community of engineers and computer scientists who develop the protocols used to run the Internet. The results suggest that IETF participants use authors' identity as a signal or filter, paying more attention to proposals from highstatus authors, and this has a surprisingly large impact on publication outcomes. There is little evidence of a 'taste' for status

A Dyad Model of Calling Behaviour with Tie Strength Dynamics

This paper investigates the dynamic relation between callers' social ties and their wireless phone service consumption. We construct a large pair-level panel dataset with information on the number of each pair's common contacts, calling activities, prices, and each caller's characteristics over a one-year time period. We estimate a dynamic model that encapsulates the evolving relationship between each pair of consumers. We find the amount of communications between a pair of consumers increases with the strength of their tie, which is higher when these two consumers share more common contacts. Our results support the reciprocity rule in telephone calls, i.e. when individual A initiates more (less) phone calls to individual B in one month, their social tie will be strengthened (weakened) and individual B will make more (less) calls to individual A in the subsequent months. We demonstrate the implications of our results in evaluating the return of temporary price promotions and designing price plans. Our results underscore the importance of incorporating social network characteristics in the study of telecommunications markets

Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market

This paper investigates the scope of indirect network effects in the home video game industry. We argue that the increasing prevalence of non-exclusive software gives rise to indirect network effects that exist between users of competing and incompatible hardware platforms. This is because software non-exclusivity, like hardware compatibility, allows a software firm to sell to a market broader than a single platform's installed base, leading to a dependence of any particular platform's software on all firms' installed bases. We look for evidence of these market-wide network effects by estimating a model of hardware demand and software supply. Our software supply equation allows the supply of games for a particular platform to depend not only on the installed base of that platform, but also on the installed base of competing platforms. Our results indicate the presence of both a platform-specific network effect and -in recent years- a cross-platform (or generation-wide) network effect. Our finding that the scope of indirect network effects in this industry has widened suggests one reason that this market, which is often cited as a canonical example of one with strong indirect network effects, is no longer dominated by a single platform