Another Perspective on Planned obsolescence: is there really too much Innovation?

Models of durable goods with network externalities that set instantaneously have emphasized that a monopolist selling those goods has too high an incentive to introduce new vintages of the durable good, to make previous vintages (already bought by consumers) obsolete. This is referred to as planned obsolescence. We examine the robustness of planned obsolescence to the inclusion of network externalities that set in with a lag. If externalities set in with a lag (however small), consumers have an incentive to wait for other consumers to adopt the new vintage first, and in the absence of any change in prices, that leads to inefficient delay in adoption. Combining the two types of incentives we show that the monopolist is able to overcome consumer's inertia and still generate planned obsolescence through both intratemporal and intertemporal price discrimination. However, if monopoly power is "short lived" (for example due to copying), we show that, depending on the parameters of the model, we could have both types of inefficiencies: planned obsolescence or delay. Delay is brought about because copying limits the ability of the monopolist to increase prices in the future and therefore gives consumers an incentive to wait for both the onset of the (lagged) externality effect and the reduction in price caused by copiers. Delay appears mainly when the externality effect is strong and the new vintage is a significant improvement over the existing durable good.Planned obsolescence, durable goods, lagged network externalities, monopoly, delay.

Cost effectiveness of R&D and the robustness of Strategic Trade Policy

This paper analyzes the incentives for governments to impose export subsidies when firms invest in a cost saving technology before market competition. Governments first impose an export subsidy or a tax. After observing export policy, firms invest in cost reducing R&D and subsequently compete in the market. Governments subsidize exports under Cournot competition. Under Bertrand competition, export subsidies are positive whenever R&D is suffciently cost-effective at reducing marginal costs, and negative otherwise. The trade policy reversal found in models without endogenous sunk costs disappears if R&D is sufficiently cost-effective. Output subsidies are more robust than implied by the recent literature.

International Trade Policy towards Monopoly and Oligopoly

This paper highlights the importance of product differentiation and endogenous R&D in determining the optimal R&D policy, in a model where investment in cost reducing R&D is committed before firms compete in a differentiated-goods third-country export market. R&D is always taxed in oligopolies for high degrees of product differentiation. For lower degrees of product differentiation the duopoly is subsidized or the government remains inactive. In contrast, the monopoly is always subsidized. The government with a duopoly may be active or inactive depending on the degree of product differentiation. Thus, we may observe a reversal in the sign of the optimal R&D policy if the degree of product differentiation changes or, alternatively, if there is a change in the number of firms. Similar qualitative results hold if trade policy uses output subsidies, instead of R&D promotion

One-loop quantization of rigid spinning strings in AdS3×S3×T4AdS_3 \times S^3 \times T^4 with mixed flux

We compute the one-loop correction to the classical dispersion relation of rigid closed spinning strings with two equal angular momenta in the $AdS_3 \times S^3 \times T^4$ background supported with a mixture of R-R and NS-NS three-form fluxes. This analysis is extended to the case of two arbitrary angular momenta in the pure NS-NS limit. We perform this computation by means of two different methods. The first method relies on the Euler-Lagrange equations for the quadratic fluctuations around the classical solution, while the second one exploits the underlying integrability of the problem through the finite-gap equations. We find that the one-loop correction vanishes in the pure NS-NS limit.Comment: 35 pages. v2: Minor changes and references updated. v3: Published versio

Production externality and productivity of labor.

In this paper we consider two imperfectly competitive industries, with the polluting emissions from one industry harming the productivity of labor in the other. The polluting industry has to pay an environmental tax chosen by the government. In this framework, we analyze how the different organizational structure adopted by workers affect the environmental tax set by the government, total pollution emissions from the polluting industry and the productivity of workers in the industry that suffers the externality. We obtain that this depends on the degree to which pollution emissions from the polluting industry affects the marginal product of labor in the other industry.Production externality, productivity of labor, environmental taxes, imperfect competition, unionized labor.

Cost Effectiveness of R&D and the Robustness of Strategic Trade Policy

This paper analyzes the incentives for governments to impose export subsidies when firms invest in a cost saving technology before market competition. Governments first impose an export subsidy or a tax. After observing export policy, firms invest in cost reducing R&D and subsequently compete in the market. Governments subsidize exports under Cournot competition. Under Bertrand competition, export subsidies are positive whenever R&D is sufficiently cost-effective at reducing marginal costs,and negative otherwise.The trade policy reversal found in models without endogenous sunk costs disappears if R&D is sufficiently cost-effective. Output subsidies are more robust than implied by the recent literature.Product Differentiation,Strategic Trade Policy,Policy Reversals,R&D.