protection with static collusion the present paper argues that when static collusion takes place there is a new justification for a tariff this occurs in the context of a model in which consumers observe prices at a cost and the industry structure is a duopoly with a home and a foreign firm because costly search induces imperfect information about prices on the part of consumers the ability to rapidly revise posted prices on the part of the duopolists leads to the appropriation of a substantial amount of consumer surplus the static collusion takes place under any trade policy thus a home tariff that shifts a duopoly equilibrium to the advantage of the home firm will be demonstrated to entail in the case of a nonprohibitive tariff no consumption cost from protection because this tariff generates revenue for the home government and greater profits for the home firm it will be welfare improving to the home country the concept of profit shifting as a motive for commercial policy in imperfectly competitive markets was pioneered by brander and spencer 6 2 in a model where home and foreign duopolists are nash courot competitors a tariff can shift profits from the foreign to the home firm by inducing the foreign firm to play less aggressively in the present paper the tariff shifts profits within the collusive outcome by precluding more aggressive play by the foreign firm 3 furthermore davidson 8 has disclosed that the level of a tariff can affect the incentives to collude in a quantity setting supergame with nash cournot punishments in the present model the tariff affects the collusive outcome that can be supported it does not however affect the incentives to collude

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

investing in a green transition abstract at the rio 20 conference the world s governments affirmed a need to transition toward green economies and background reports in preparation for the event emphasized the role of investment subsequent authors noted that private investment flows overwhelm public ones arguing that private investment must be mobilized for a transition however the role of private investment in a major economic transition is poorly understood particularly when the investment is not inherently attractive to investors and must be made attractive through policy we present a model representing investment macroeconomic interactions with classical features among its novel features is a distinction between affected sectors which are sensitive to the amount of green capital in the economy because of network effects and forward backward linkages and unaffected sectors which are relatively insensitive we argue that affected sectors are both harder to change and nearer to the base of the economy in model runs we observe that in a green transition the affected sector lags the unaffected sector with possible implications for a transition strategy thus in the model firm and investor behavior postpones deeper and more systemic changes until late in the transition

accounting for change in national systems of innovation a friendly critique based on the u s case abstract this paper advances a friendly critique of the national systems of innovation approach and offers some suggestions for its future development i argue that the approach has difficulty accounting for bounded change in national systems i review three recent changes in the u s innovation system the internet boom and bust of the late 1990s and early 2000s the response to the terrorist attacks of september 11 2001 and the acceleration of productivity growth since the mid 1990s in order to assess the strengths and weaknesses of the framework in this respect future research might be enriched at least in the case of large national innovation systems by absorbing concepts developed in other strands of institutionalist literature such as intercurrence and embeddedness

a policy approach to the environmental impacts of technological lock in abstract the broadening spectrum of environmental problems the uncertainty regarding their scale and duration and their possible irreversibility in the context of the growing social preference for environmental quality make it necessary to undertake an ex ante approach to the link between productive activity and environmental quality this link lies in technology and the right approach is to understand how the process of technological change can lead towards sustainability the added value of evolutionary economics in the context of environmental policy resides mainly in the fact that it warns that certain inferior environmental technologies may be locked in to the economic system the results of our model show that it would be advisable to undertake policies expressly aimed at the process of sustainable technological change applying an ex ante precautionary approach in a way that is complementary to the conventional equilibrium oriented environmental policies the nature of these policies and how they might be implemented are questions we will address from this novel approach to the concept of sustainable development in short the main objectives of this paper are to understand more fully the dynamics of the process of technological change its role in sustainable development and to assess the implications of this dynamic approach to techno environmental policy to achieve these goals we have developed an agent based model abm using distributed artificial intelligence dai concepts drawn from the general methodology of social simulation

revocable pricing can yield collusive outcomes abstract traditional models of bertrand price competition assume irrevocable price announcements in contrast when price changes have zero direct costs but sales are thereby delayed the collusive monopoly outcome is a subgame perfect outcome and is moreover the natural focal equilibrium

the conditioning effect of time on firm survival an industry life cycle approach in an effort to reconcile theoretical blind spots we integrated research in technology management organizational ecology and evolutionary economics the central premise underlying the resultan

keep searching and you ll find what do we know about variety creation through firms search activities for innovation this article critically reviews and synthesizes the contributions found in theoretical and empirical studies of firm level innovation search processes it explores the advantages and disadvantages of local and non local search discusses organizational responses and identifies potential exogenous triggers for different kinds of search it argues that the initial focus on local search was a consequence in part of the attention in evolutionary economics to path dependent behavior but that as localized behavior was increasingly accepted as the standard mode studies began to question whether local search was the best solution in all cases more recently the literature has focused on the trade offs being created by firms having to balance local and non local search we account also for the apparent variety paradox in the stylized fact that organizations within the same industry tend to follow different search strategies but end up with very similar technological profiles in fast growing technologies the article concludes by highlighting what we have learnt from the literature and suggesting some new avenues for research

systems thinking market failure and the development of innovation policy the case of australia innovation policy is increasingly informed from the perspective of a national innovation system nis but despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation policy prescriptions tend to be uniform justifications for innovation policy generally relate to notions of market failure that are applicable in all nations in all conditions in this paper we develop a broad framework for nis analysis involving free market coordination and complex evolutionary system approaches within this framework we explore the evolving relationship between market failure and systems approaches to innovation policy in the case of australia drawing on information and analysis collected for a major review of australia s nis and the government s 10 year plan in response to it we show how the free market trajectory of policy making of past decades is being extended complemented and refocused by new approaches to complex evolutionary system thinking these approaches are shown to emphasize the importance of systemic connectivity evolving institutions and organizational capabilities nonetheless despite the fact that there has been much progress in this direction in the australian debate the predominant logic behind policy choices still remains one of addressing market failure and the primary focus of policy attention continues to be science and research rather than demand led approaches we discuss how the development and elaboration of notions of systems failure rather than just market failure can further improve policy making in the future

a model of technological breakthrough in the renewable energy sector abstract models with induced technological change in the energy sector often predict a gradual expansion of renewable energies and a substantial share of fossil fuels remaining in the energy mix through the end of our century however there are historical examples where new products or technologies expanded rapidly and achieved a high output in a relatively short period of time this paper explores the possibility of a technological breakthrough in the renewable energy sector using a partial equilibrium model of energy generation with endogenous r d our results indicate that due to increasing returns to scale a multiplicity of equilibria can arise in the model two stable states can coexist one characterized by a lower and one by higher supply of renewable energy the transition from the low output to the high output equilibrium is characterized by a discontinuous rise in r d activity and capacity investments in the renewable energy sector the transition can be triggered by a rise in world energy demand by a drop in the supply of fossil fuels or by policy intervention under market conditions the transition occurs later than in the social optimum hence we identify a market failure related to path dependence and technological lock in that can justify a strong policy intervention initially paradoxically well intended energy saving policies can actually lead to higher emissions as they reduce the incentives to invest in renewable energies by having a cushioning effect on the energy price hence these policies should be supplemented by other instruments that restore the incentives to invest in renewable energies finally we discuss the influence of monopoly power in the market for innovations we show that market power can alleviate the problem of technological lock in but creates a new market failure that reduces static efficiency

the market failure and the systemic failure rationales in technological innovation systems abstract in this paper we analyse the conceptual relationship between the market failure rationale and the systemic failure rationale as justifications for policy intervention within an innovation systems is analytical framework current policy analyses in the is literature are characterised by two contrasting theoretical positions regarding the way in which both rationales are conceptually interrelated in one strand of the literature the market failure rationale is considered as a valid although insufficient justification for policy intervention that therefore needs to be complemented by the arguments put forward by the systemic failure rationale this perspective implicitly presents the systemic failure framework as a more general approach than the market failure perspective on the other hand a number of is policy contributions explicitly reject the market failure approach and consider it a flawed argument for government intervention in this theoretical view the systemic failure approach is thus proposed as a more appropriate alternative innovation policy rationale despite their relevance as the theoretical bases that currently underpin actual innovation policy design an analysis of the robustness and conceptual coherence of these contrasting perspectives has not been provided so far in this work we set the analytical steps we deem required for this analysis and investigate under which premises the relationship between the market failure and the system failure rationales proposed by these two policy perspectives is valid from a theoretical point of view

the internationalisation of r d by multinationals a trade off between external and internal proximity overseas production is frequently seen as a force inducing the decentralization of rd it should on the contrary be completed by the implementation of relations of proximity internal to the firm which they refer to as internal proximity from this perspective the multinational firm that manages dispersed r d units is seen as facing a tension an organizational trade off between external proximity and internal proximity copyright 1999 by oxford university press

quick responses in duopoly ensure monopoly pricing if firms in a homogeneous duopoly game can respond with negligible delay to their rival s price changes equilibrium is unique at the monopoly price

why do firms do basic research with their own money abstractthe question to be addressed is why do private firms perform basic research with their own money interest in this question derives from both analytical and utilitarian considerations there is empirical evidence in the united states which provides the main context for this paper supporting the view that basic research makes a significant contribution to the productivity growth of the economy 4 7 it is widely held that social returns from basic research are significant and higher than private returns and it is for this reason that most such activities continue to be financed by the taxpayer this also implies that measures aimed at increasing basic research by the private sector will be welfare improving in the united states the federal government in the years since the second world war has provided the vast majority of all funds devoted to basic research although the federal share has been declining in recent years and although that share is at its lowest level in about 20 years it still constitutes about two thirds of the total 10 this abstract was borrowed from another version of this item

measuring systemic problems in national innovation systems an application to thailand the paper contributes to research on innovation systems in general and in particular to the current debate on rationales for innovation policy by providing a framework to identify systemic problems in a given system of innovation and test the framework empirically the data were drawn from the thai community innovation survey in the period after which a major change in the country s innovation system policy had been initiated by hierarchical factor analysis systemic problems are identified and grouped into four components institution network science and technology infrastructure and other support services the analysis allows researchers to investigate the mismatch between policies and problems and identify policy gaps c 2012 elsevier b v all rights reserved less

reconceptualising the policy mix for innovation abstract recent years have seen the emergence take up and use of the term policy mix by innovation policy makers and by policy analysts and scholars alike imported from economic policy debates the term implies a focus on the interactions and interdependencies between different policies as they affect the extent to which intended policy outcomes are achieved however the meaning of the term remains ambiguous nonetheless we argue that the emergence of the policy mix concept into common use in the field of innovation policy studies provides us with a window of opportunity to reconsider some basic and often hidden assumptions in order to better deal with a messy and complex multi level multi actor reality we draw upon a range of literatures to re conceptualise the basic building blocks of innovation policy studies in order to arrive at a useful definition of policy mix tensions and interactions of different kinds across a series of dimensions we suggest that this reconceptualisation has important implications for the future scope and focus of prescriptive and analytical innovation policy studies

competitiveness and industrial policy from rationalities of failure towards the ability to evolve this article elaborates a dynamic rationale of industrial policy focusing on how to strengthen the socio economic system s ability to evolve i e how to achieve high real income together with qualitative change it highlights that the ubiquitous rationalities of failure be it of markets governments or systems are rooted in a peculiar habit of accepting hypothetical perfect states as normative benchmarks in contrast a dynamic logic of intervention should start from the question what the system aims to accomplish combining the structuralist ontology of micro meso and macro with the functional principles of evolutionary change the paper proposes a general typology of economic policies based on their respective contributions to the system s ability to evolve

different missions and commitment power in r d organizations theory and evidence on industry university alliances this paper proposes a theory for why firms conduct some research activities in house but outsource other projects to independent partners and for why firms retain different degrees of control over collaborative research projects the focus is on the determinants of a company s choice to outsource research projects to academic organizations because of the different institutional missions of academic organizations outsourcing a project to a university allows a firm to commit not to terminate or alter a scientifically valuable project before it is complete this commitment is potentially valuable for the firm in an environment where scientific value and economic value may not coincide and scientific workers are responsive to the incentives defined by their community of peers an economic model that formalizes these arguments is developed empirical hypotheses are then formulated about the kind of research activities firms will outsource to universities and activities on which they will exert stronger control evidence from a sample of industry university research agreements as well as from other large sample and case studies shows patterns consistent with the predictions of the model

schumpeter meeting keynes a policy friendly model of endogenous growth and business cycles this paper studies an agent based model that bridges keynesian theories of demandgeneration and schumpeterian theories of technology fueled economic growth we employ the model to investigate the properties of macroeconomic dynamics and the impact of public polices on supply demand and the fundamentals of the economy we find profound complementarities between factors influencing aggregate demand and drivers of technological change that affect both short run fluctuations and longterm growth patterns from a normative point of view simulations show a corresponding complementarity between keynesian and schumpeterian policies in sustaining long run growth paths characterized by milder fluctuations and relatively lower unemployment levels the matching or mismatching between innovative exploration of new technologies and the conditions of demand generation appear to suggest the presence of two distinct regimes of growth or absence thereof characterized by different short run fluctuations and unemployment levels

the two faces of market support how deployment policies affect technological exploration and exploitation in the solar photovoltaic industry the recent years have seen a strong rise in policies aiming to increase the diffusion of clean energy technologies while there is general agreement that such deployment policies have been very effective in bringing technologies to the market it is less understood how these policies affect technological innovation to shed more light on this important question we conducted comparative case studies with a global sample of 9 firms producing solar photovoltaic pv modules complemented by in depth interviews with 16 leading pv industry experts we propose that on the one hand policy induced market growth serves as an important catalyst for innovative activity as it raises the absolute level of firm investments in technological exploration on the other hand however deployment policies create an incentive for firms pursuing more mature technologies to shift their balance between exploitation and exploration toward exploitation firms focusing on less mature technologies cannot tap the potentials of exploitative learning to the same extent as those with more mature technologies therefore stimulating strong market growth may raise the barrier to market entry for less mature technologies we conclude that when designing deployment policies great care should be taken to avoid adverse effects on technological diversity and a premature lock in into more established technologies

evolutionary economics and technology policy in this brief paper i propose to explore the economics of technology policy from an evolutionary perspective as with any evolutionary argument the central concern is with the mechanisms of economic change in this case in relation to the development of new technologies and patterns of organisation and their spread into the wider economic system in this sense we build upon one of the major stylized facts of modern growth structural change at all levels from the microeconomic to the macroeconomic to any observer of the policy making process let alone a practitioner the contrast between the theory which underpins policy and the implementation of policy will seem acute as nelson and winter i982 have rightly insisted research into policy is shaped by policy questions not by an agenda relating to how economic theory can be developed to deal with innovation setting priorities designing instruments and evaluating outcomes do not link easily with the general ideas dealt with below among the general points we will stress two will be of critical importance first that the innovation activities of firms involve a wider range of other institutions supplying the knowledge and skills which underpin the efforts of individual firms we term this the systems perspective on innovation nelson i993 secondly it is not helpful to treat innovation and the diffusion of innovation as separate categories in fact they are inseparable with feedback from diffusion being one of the critical elements shaping how a technology is developed we begin with a brief review of the familiar market failure perspective on policy and build from this into a brief overview of the evolutionary approach the paper concludes with an outline of the systems perspective on technology policy it is taken as read that virtually any economic policy can have implications in principle for the process of innovation however we treat technology policy in a narrow sense even though it spills over into questions of education policy science policy and competition policy

government support for economic agendas in developing countries a behavioral model abstract a behavioral model of the roles played by the key actors in the political system of a developing country is developed and experimented with to understand circular cause and effect relationships shaping government commitment to economic development agendas the model shows that an authoritarian government whether compassionate or otherwise will be unable to provide continued support for an economic agenda since its need to increase control will eventually take priority over the need to increase public welfare