information competition and markets one of the dominant characteristics of modern capitalist economies is the important role played by competition not the peculiar static form of pure price competition embodied in the arrow debreu model but rather a dynamic competition more akin to the kind of competition represented by sports contests and other races including patent races in recent years there have been several attempts to explain why firms often base the pay of their workers and managers on relative performance see for example edward lazear and sherwin rosen 1981 such compensation schemes become desirable when three conditions are satisfied a the input effort of workers managers must not be directly observable at least without cost thus firms must either expend resources to monitor inputs or devise reward structures in which compensation is a function of variables such as output or profits which are themselves functions of inputs but are less costly to observe b the relationship between input and output must be stochastic so that by observing output one cannot perfectly infer what the input was c finally the stochastic disturbances which affect the relationship between input and output of different firms must be correlated by looking at the performance of one worker relative to that of others one can make better inferences about his effort than one can make without using this information not only can competition provide a basis of comparison which enables the design of reward structures that can simultaneously provide a high level of incentives with relatively low level risk but compensation schemes based on relative performance have the further advantage of automatically adjusting incentives to changes in the economic environment we refer to this as built in flexibility in a first best world with perfect information concerning the nature of the technology but where it is still costly to monitor individuals activities the compensation scheme would vary from time to time as the environment changed such changes in the compensation scheme are costly to implement and the information required to do so is seldom available when a task is easier the individual s rewards for performing the task should be reduced if pay is based on relative performance although all individuals perform better when they exert the same level of effort their compensation is automatically adjusted thus teachers frequently grade on the curve and a significant fraction of the pay of successful salesmen often consists of bonuses based on relative performance

when do households invest in solar photovoltaics an application of prospect theory abstract while investments in renewable energy sources res are incentivized around the world the policy tools that do so are still poorly understood leading to costly misadjustments in many cases as a case study the deployment dynamics of residential solar photovoltaics pv invoked by the german feed in tariff legislation are investigated here we report a model showing that the question of when people invest in residential pv systems is found to be not only determined by profitability but also by profitability s change compared to the status quo this finding is interpreted in the light of loss aversion a concept developed in kahneman and tversky s prospect theory the model is able to reproduce most of the dynamics of the uptake with only a few financial and behavioral assumptions

peer effects in the diffusion of solar photovoltaic panels social interaction peer effects are recognized as a potentially important factor in the diffusion of new products in the case of environmentally friendly goods or technologies both marketers and policy makers are interested in the presence of causal peer effects as social spillovers can be used to expedite adoption we provide a methodology for the simple straightforward identification of peer effects with sufficiently rich data avoiding the biases that occur with traditional fixed effects estimation when using the past installed base of consumers in the reference group we study the diffusion of solar photovoltaic panels in california and find that at the average number of owner occupied homes in a zip code an additional installation increases the probability of an adoption in the zip code by 0 78 percentage points our results provide valuable guidance to marketers designing strategies to increase referrals and reduce customer acquisition costs they also provide insights into the diffusion process of environmentally friendly technologies

antitrust for high technology industries assessing research joint ventures and mergers the purpose of this paper is to analyze if and how the standard methodology of antitrust analysis should be modified to reflect the importance of r and d and innovation as competitive forces and engines of economic progress focus is on such r and d intensive business combinations as research joint ventures rjvs and horizontal mergers in high technology industries the authors do not propose a complete set of guidelines for the assessment of such combinations they present an economic model of rjvs and high technology mergers that might serve as an analytical underpinning for such guidelines one conclusion of the analysis is that rjvs ought to be accorded special treatment under the antitrust laws this special treatment should entail an explicit recognition that rjvs will be scrutinized under the rule of reason according to guidelines specific to this purpose

a patent system for both diffusion and exclusion public policy analysis of optimal patent regimes is often framed as a tradeoff between static and dynamic efficiency in this analytical framework weak patent protection and strict antitrust policy are taken to be directed toward static concerns while protection of intellectual property through strong patent laws is taken as a reflection of broader social concerns for long run growth and technological progress this characterization has some truth but the magnitude of the conflict between static and dynamic efficiency can easily be exaggerated in this article i want to argue that weak patent protection need not be inimical to economic growth and conversely that strong patent protection need not be an enemy of diffusion appropriately structured patent law and antitrust rules can together ensure incentives for r d and also induce cooperation among firms in diffusing r d results through licensing and other means at the same time cooperation among firms at the r d stage can counterbalance weak patent protection by internalizing spillovers from ongoing r d programs and such cooperation may also produce additional spillovers from the existing knowledge

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

on the organization of cooperative research and development theory and evidence abstract it has become increasingly prevalent that business firms often rival firms join forces in cooperative r and d to develop new technologies that they can use in their downstream business equity research joint ventures and non equity co development are the two major modes of organization and they differ in how ownership rights over newly developed technologies are assigned this paper addresses the question of when cooperative r and d should be carried out in a research joint venture as opposed to a co development program in a setting of contractual incompleteness the nature of the downstream business of participating firms is shown to determine the organization of cooperative r and d empirical evidence that is consistent with the theoretical analysis is also presented

coal nuclear and renewable energy policies in germany from the 1950s to the energiewende over the last 50 years german energy policy has ranged from strong enthusiasm for both coal and nuclear energy to deep skepticism the most dramatic changes with respect to energy policies have occurred as a response to nuclear accidents yet the accidental and unintended effects of coal policies are also important in influencing the trajectory the newly emerging climate debate prevented the coal industry from acting as a substitute for the diminishing share of nuclear power in 2011 the conservative government announced the energiewende energy transformation and decided to reduce the amount of fossil fuels from 80 of the energy supply to 20 by 2050 however while the verdict on nuclear was unequivocal with a final phase out date of 2022 the share of coal in the electricity market did not decrease and the amount of carbon dioxide released into the air slightly increased from 2011 to 2013 there are growing conflicts over the immediate costs and practicalities of coal replacement consequently the future of coal in germany is still relatively open and contested

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

cooperation and political economic performance in affluent democratic capitalism research on comparative political economic performance has traditionally followed two separate tracks one concerned with collective economic gain growth and efficiency and the other focused on distribution and redistribution cooperative institutions offer a key to understanding cross national variation among the affluent capitalist democracies in both facets of political economic performance these institutions cluster along two dimensions neocorporatism and firm level cooperation pooled time series analysis for 18 nations over 1960 89 suggests that 1 neocorporatism is a major source of distributive redistributive policies and outcomes and of several sources of collective gain 2 firm level cooperation is a key contributor to economic growth

solar feed in tariffs in a post grid parity world the role of risk investor diversity and business models over the past decade feed in tariffs have spurred significant deployment of solar photovoltaics in germany and other countries with recent cost trends several countries are approaching retail grid parity some policymakers conclude that now is the time to remove feed in tariffs as grid parity creates a self sustaining market where economically rational investors will invest even in the absence of government incentives recent experience in key european solar markets however shows that with the advent of grid parity and the reduction of feed in tariffs investment in new solar capacity has decreased rather than increased making it questionable whether low carbon energy policy targets will be reached we conduct a cross case study analysis of three pv markets germany italy and switzerland to investigate the role of feed in tariffs for the near and post grid parity stages of diffusion accounting for investor diversity and distinguishing between implications for revenue based and savings based business models we find that recent market trends are strongly driven by increased levels of risk especially policy risk and exposure to revenue risk we therefore suggest that relatively frugal but stable policy environments may be conducive to further growth of investment in photovoltaics and minimize cost to society

how feed in remuneration design shapes residential pv prosumer paradigms as part of their clean technology and decarbonization strategies numerous countries have introduced feed in remuneration fir schemes to spur the deployment of solar photovoltaics pv however in the light of rising retail electricity prices and falling costs for rooftop solar installations in recent years policy makers and regulators face the difficult task of deciding when and how these schemes should be amended or phased out to understand how such actions might shape the role of residential solar and the resulting economics in a changing electricity system we study how the design of fir schemes affects optimal pv system sizes to illustrate our approach we draw on empirical data on the fir policies of net metering and feed in tariffs from california and germany between 2005 and 2016 using a techno economic model and a conceptual framework we show that fir design and its interplay with retail electricity prices and pv system costs jointly determine whether residential pv installations are economic how they are sized and which prosumer paradigms they spur our analysis holds numerous implications for policy makers and advisors responsible for redesigning or adapting existing fir mechanisms as well as for the stakeholders of an emerging ecosystem based on residential solar pv

innovation and cooperation implications for competition and antitrust n k robel laureate robert solow and his colleagues on mit s industrial productivity commission recently noted dertouzos lester and solow 1989 p 7 undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance and later p 105 that interfirm cooperation in the u s has often though not always been inhibited by government antitrust regulation these striking conclusions warrant further exploration unfortunately industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory on the other hand vertical cooperation contracting is viewed differently and some textbooks provide treatments of supplier buyer relationships in which cooperation is viewed as enhancing efficiency both in the textbooks and in policy discussion among economists cooperation among competitors is highly suspect being perhaps the last bastion of what was once referred to as the inhospitality tradition in antitrust as a result very little literature addresses how cooperation among competitors can promote competition notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today s increasingly global markets imai and baba 1989 such cooperation is already important in japan and in europe 1

feed in tariffs combined with capital subsidies for promoting the adoption of residential photovoltaic systems abstract both feed in tariffs fits and capital subsidies have been widely employed to promote the adoption of renewable energy technologies this study sheds light on the combined use of fits and capital subsidies the purpose of the study is to clarify their optimal combinations in order to encourage households to adopt photovoltaic pv systems the study develops a microeconomic model embodying the idea of two part tariffs the most important findings concern the combination that maximizes social welfare if fits are applied to the total pv electricity generated they should be set at the avoided cost per unit of pv electricity and capital subsidies should be used to control the number of adopters whereas if fits are applied to only surplus pv electricity the previous principle is distorted however a numerical example suggests that the distortion has little effect on the maximized social welfare and thus it makes little difference whether fits are applied to all pv electricity or just the surplus pv electricity the findings may also be applied to the adoption of wind power generation systems and to adoption by businesses

the doping effect of italian feed in tariffs on the pv market abstract in less than six years italy has become one of the leading markets for pv power plants and one of the countries in the world with the largest number of installations and installed peak power such a quick and large growth is due to a series of feed in tariff schemes that have been uncapped until 2012 as a matter of fact any size or any number of pv power plants could be installed during a period of three years since the feed in tariffs are not paid by national taxes but are charged on the electricity bills italian energy users are now due to pay each year a surcharge of 9 billion euros on their energy bills this paper aims at discussing this development by highlighting the benefits but also some significant drawbacks that the application of uncontrolled feed in tariffs has produced

sociodynamic modeling of small scale pv adoption and insights on future expansion without feed in tariffs abstract understanding complex phenomena such as energy transitions which bear technical economic and social dimensions requires a multi directional approach expansion of the solar energy in the energy mix of a country is similarly complex as its decentralized nature brings about a necessity of public approval and trust besides its economics we therefore develop a combined socio economic model which is based on the sociodynamics framework for the household level adoption of photovoltaics pv we apply the model to the cases of german and italian pv expansion and make a retrospective analysis regarding their dynamics in order to identify the importance of various factors such as the profitability and the public opinion throughout their expansion timeline we then project our model for the german pv expansion onto the near future and investigate the requirement of feed in tariffs to maintain the expansion targets under various scenarios results of our projection point at the importance of the self consumption of pv electricity an average self consumption ratio higher than 25 makes a phase out of feed in tariffs by 2030 possible whereas 50 self consumption renders the feed in tariff regulation obsolete even in today s economic conditions

capitalism as an engine of progress economists from marx to schumpeter have touted capitalism as an engine of technical progress but what kind of an engine is it what are its key components how does it work

adoption of residential solar power under uncertainty implications for renewable energy incentives abstract many incentives at the state and federal level exist for household adoption of renewable energy like solar photovoltaic pv panels despite generous financial incentives the adoption rate is low we use the option value framework which takes into account the benefit of delaying investment in response to uncertainty to examine the decision by households to invest in solar pv using a simulation model we determine optimal adoption times critical values of discounted benefits and adoption rates over time for solar pv investments using data from massachusetts we find that the option value multiplier is 1 6 which implies that the discounted value of benefits from solar pv needs to exceed installation cost by 60 for investment to occur without any policies median adoption time is eight years longer under the option value decision rule compared to the net present value decision rule where households equate discounted benefits to installation cost rebates and other financial incentives decrease adoption time but their effect is attenuated if households apply the option value decision rule to solar pv investments results suggest that policies that reduce the uncertainty in returns from solar pv investments would be most effective at incentivizing adoption

discrimination and neighborhood effects understanding racial differentials in us housing prices abstract because race and neighborhood characteristics are strongly correlated studies of racial housing price differentials have yielded results that vary widely depending on the types of neighborhood controls used this paper shows that even with relatively thorough neighborhood controls there is still evidence that correlation between the error term and regressors is a source of bias while recent studies have tended to find evidence of a negative premium for blacks fixed effects estimates in this paper indicate that black owners pay premiums of around 10 percent for housing moreover house values decline in neighborhoods as the percentage of blacks increases suggesting prejudicial attitudes

a cge analysis of the impact of foreign direct investment and tariff reform on female and male workers in tanzania summary this study analyzes the impact on female and male workers of tariff reform and the reduction of regulatory barriers faced by domestic and foreign firms operating in business services it develops a data set that distinguishes labor by gender for 52 sectors and four skill categories the model is the first to incorporate modern trade theory to assess its gender implications the dixit stiglitz framework results in productivity gains which increase remunerations across all worker categories however this is less beneficial for women because the less skilled workers and the ones that are less involved in business services gain less

towards an economic theory of the multiproduct firm this paper outlines a theory of the multiproduct firm important building blocks include excess capacity and its creation market imperfections and the peculiarities of organizational knowledge including its fungible and taut character a framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets neoclassical explanations of the multiproduct firm are shown to be seriously deficient

uncertainty spillovers and cooperative r d abstract this paper extends the literature on cooperative r d in an oligopoly with spillovers the model has three new features it introduces uncertainty focuses on spillover of innovation instead of effort spillover and offers a new definition of the research joint venture rjv the rjv is an arrangement to coordinate r d efforts and also to share the innovation firms form an rjv only if the innovation raises flow industry profit but independently of the speed of spillovers and the degree of uncertainty the model is robust when we allow for licensing the single lab endogenous spillovers and r d effort spillovers