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Author: Luis M. B. Cabral Publisher: ISBN: Category : Languages : en Pages : 28
Book Description
We provide a simple framework to analyze the effect of firm dominance on incentives for Ramp;D. An increase in firm dominance, which we measure by a premium in consumer valuation, increases the dominant firm's incentives and decreases the rival firm's incentives for Ramp;D. These changes influence the probability of innovation through two effects: changes in total Ramp;D effort and changes in how this total is distributed between the two firms.For a given level of total research effort, the shift from the rival firm to the dominant firm is a good thing as it decreases the likelihood of duplicate innovation (we call this the duplication effect). However, the shift in research effort is not one-to-one. The dominant firm's benefit from increased dominance is more inframarginal than marginal when compared to the rival firm's disincentive. As a result, total research effort decreases when firm dominance increases (we call this the total effort effect).We show the total effort effect dominates the duplication effect when intellectual property protection is weak, and the opposite when property rights are strong. That is, firm dominance is good for innovation when (but only when) property rights are strong. We also examine consumer and social surplus.
Author: Luis M. B. Cabral Publisher: ISBN: Category : Languages : en Pages : 28
Book Description
We provide a simple framework to analyze the effect of firm dominance on incentives for Ramp;D. An increase in firm dominance, which we measure by a premium in consumer valuation, increases the dominant firm's incentives and decreases the rival firm's incentives for Ramp;D. These changes influence the probability of innovation through two effects: changes in total Ramp;D effort and changes in how this total is distributed between the two firms.For a given level of total research effort, the shift from the rival firm to the dominant firm is a good thing as it decreases the likelihood of duplicate innovation (we call this the duplication effect). However, the shift in research effort is not one-to-one. The dominant firm's benefit from increased dominance is more inframarginal than marginal when compared to the rival firm's disincentive. As a result, total research effort decreases when firm dominance increases (we call this the total effort effect).We show the total effort effect dominates the duplication effect when intellectual property protection is weak, and the opposite when property rights are strong. That is, firm dominance is good for innovation when (but only when) property rights are strong. We also examine consumer and social surplus.
Author: Luis M. B. Cabral Publisher: ISBN: Category : Languages : en Pages : 26
Book Description
We provide a simple framework to analyze the effect of rm dominance on incentives for Ramp;D. An increase in firm dominance, whichwe measure by a premium in consumer valuation, increases the dominant firm's incentives and decreases the rival firm's incentives for Ramp;D. These changes inuence the probability of innovation through two effects: changes in total Ramp;D effort and changes in how this total is distributed between the two firms.For a given level of total research effort, the shift from the rival firm to the dominant rm is a good thing as it decreases the likelihood of duplicate innovation (we call this the duplication effect). However, theshift in research effort is not one-to-one. The dominant firm's benefit from increased dominance is more inframarginal than marginal when compared to the rival firm's disincentive. As a result, total researcheffort decreases when rm dominance increases (we call this the total effort effect).We show the total effort effect dominates the duplication effect when intellectual property protection is weak, and the opposite when property rights are strong. That is, rm dominance is good for innovation when(but only when) property rights are strong. We also examine consumer and social surplus.
Author: Luís M. B. Cabral Publisher: ISBN: Category : Industrial organization (Economic theory) Languages : en Pages : 25
Book Description
We develop a dynamic innovation model with three important features: (a) asymmetry between large and small firms ("giants" and "dwarfs"); (b) technology transfer by acquisition; and (c) the distinction between radical innovation (compete for the market) and incremental innovation (compete within the market). We provide conditions such that (a) greater asymmetry between giant and dwarfs decreases incremental innovation but increases radical innovation; and (b) allowing for technology transfer increases incremental innovation but decreases radical innovation. These results have several policy implications, including: (a) with weak markets for technology, a soft antitrust policy toward dominant firms leads to an increase in radical innovation but a decrease in incremental innovation; (b) a merger policy that restricts the acquisition of fringe firms by dominant firms leads to lower incremental innovation rates and higher radical innovation rates; (c) the effect of IP protection on innovation is mixed: by increasing the prize from patenting, it increases incremental innovation; but, by improving the market for technology, it reduces the rate of radical innovation.
Author: Hyun Joong Im Publisher: ISBN: Category : Languages : en Pages : 66
Book Description
Technological imitation may play a crucial role in motivating firms to innovate. However, theoretical predictions and empirical findings on the role of imitation have not yet reached a consensus. One major gap in the previous studies is that the empirical tests are based on samples consisting of only one industry over a short period of time. This study uses a novel measure of industry-level technological imitation proxied by quick citations by competitors to examine the relationship between imitation and innovation. Using US patent data for the period 1977-2005, we find that there are inverted U-shaped relationships between the degree of industry-level technological imitation and industry-level innovation activities and between the degree of industry-level technological imitation and the value of firm-level innovation. Our results suggest that positive externalities from the interactions among firms during the innovation process outweigh the negative effects of free-riding concerns on firms' innovation activities and incentives to innovate up to a high degree of technological imitation, while free-riding concerns outweigh the positive externalities when the level of technological imitation is extremely high. The sector-by-sector analyses show that the relationship between technological imitation and the quantity and market value of innovation are not very different across Pavitt sectors. A comparative analysis on the role of imitation between agglomerated and non-agglomerated industries suggests that the positive effect of a moderate level of imitation and the negative effect of an excessive level of imitation are more pronounced for agglomerated industries. The results suggest that creating innovation clusters, such as Silicon Valley in the United States and Shenzhen City in China, and allowing different innovators to cooperate, imitate and compete with each other would be very effective in promoting corporate innovation. However, an excessively high level of technological imitation is more detrimental for firms in innovation clusters because it lowers those firms' incentives to innovate more radically.
Author: Olivier Cadot Publisher: ISBN: Category : Languages : en Pages :
Book Description
When innovation is followed by imitator entry, the degree to which the innovator can appropriate the rents induced by its innovations, influences the rate of innovative activity. The author's interest focuses upon the interaction between the rate of innovative activity and the length l of the delay between the innovation and imitation, in a model in which innovative activity generates a sequence of new innovations in the face of market saturation, a competitive motivation (to maintain the monopoly position), and a strategic motivation (to deter entry). The goal of the authors' analysis is to elicit the circumstances in which each force dominates. Because of these countervailing forces, the optimal rate of innovation may not be monotone in the delay l; furthermore, a more easily saturated market can benefit the innovator.
Author: Josh Lerner Publisher: University of Chicago Press ISBN: 0226473031 Category : Art Languages : en Pages : 715
Book Description
This volume offers contributions to questions relating to the economics of innovation and technological change. Central to the development of new technologies are institutional environments and among the topics discussed are the roles played by universities and the ways in which the allocation of funds affects innovation.
Author: Luis M. B. Cabral
Author: Luis M. B. Cabral
Author: Luís M. B. Cabral
Author: Luis M. B. Cabral
Author: Luís M. B. Cabral
Author: Luís M. B. Cabral
Author: Jonathan Bruce Good
Author: Hyun Joong Im
Author: Olivier Cadot
Author: Josh Lerner
Author: O. Cadot