patents or prizes monopolistic r d and asymmetric information abstract in this paper a model of r d regulation is analysed to compare the effect of two types of asymmetric information on the welfare properties of patents and prizes as r d incentive instruments when there is a technological leader using the case of full information as a benchmark it is found that the trade off between patents and prizes does not change if the innovator s r d costs are private information whereas the relative efficiency of patents decreases if the government is less informed about the market for the innovation

growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

skill differentiation and wage disparity in a decentralized matching model of north south trade this paper develops a north south trade model in which the south produces food and the north produces both food and a high tech good food production is undertaken by unskilled workers while the high tech product is made only by horizontally differentiated skilled workers due to the possibility of a peergroup effect we allow the unskilled workers in the north to be equally or more productive than in the south horizontal matching of skilled workers is generally imperfect and the skilled wages are determined by a symmetric nash bargain we characterize two different types of equilibrium a closed economy equilibrium without trade and a free trade equilibrium without labor mobility we then extend the benchmark framework to consider the presence of transport costs in all cases with trade the equilibrium properties of goods pricing the volume of trade and wage disparities are examined

crime and poverty a search theoretic approach numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities we study this phenomenon in the context of a search equilibrium model in which agents choose between formal employment and pursuing crimerelated activities theft prior to their occupational choices agents undertake costly schooling raising their productivity crime acts in essence as a tax on human capital by affecting the probability that a worker s earnings possessions are subsequently appropriated there are multiple equilibria high crime low levels of educational attainment long spells of unemployment and poverty are correlated across them

a search equilibrium approach to the effects of immigration on labor market outcomes we analyze the impact of the skill biased immigration inux that took place during the years 2000 2009 in the united states within a search and matching model that allows for skill heterogeneity dierential search cost between immigrants and natives capital skill complementarity and possibly endogenous skill acquisition within such a framework we nd that although the skill biased immigration raised the overall net income to natives it may have had distributional eects specically unskilled native workers gained in terms of both employment and wages skilled native workers on the other hand gained in terms of employment but may have lost in terms of wages nevertheless in one extension of the model where skilled workers and immigrants are imperfect substitutes we nd that even the skilled wage may have risen

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

learning by doing and the introduction of new goods a dynamic general equilibrium model is developed in which goods are valued according to the characteristics they contain the set of goods produced in any period is endogenously determined and learning by doing is the force behind sustained growth it is shown that the set of produced goods changes in a systematic way over time with goods of higher quality entering each period and those of lower quality dropping out the model is then used to study the effect of introducing a traditional sector in which there is no learning

litigation and settlement in patent infringement cases a patent grants its owner the right to sue intruders that have been identified the patentholder must then supervise the market and react in case of infringement his reaction may be to go to court to settle or to accept entry we investigate how intensive the monitoring effort should be and how it will influence the entry decision in a simultaneous game even if the penalty paid by the infringer in case of a finding of liability is high the patentholder may prefer a settlement to a trial the likelihood of entry may increase with the penalty in sequential games regardless who plays first entry occurs comparatively less often than in the simultaneous game

tilting the table the use of preliminary injunctions abstract this paper examines the economic role of preliminary injunctions in legal disputes we present a model in which differences in financing costs drive the use of preliminary injunction and explore the implications of this legal remedy for ex post efficiency and ex ante incentives controlling for the nature of the dispute we examine the relationships between the financial status of litigating parties and whether a preliminary injunction is requested the empirical analysis uses detailed data compiled for a sample of 252 patent suits and reveals patterns generally consistent with those suggested by the model

labor market frictions human capital accumulation and long run growth positive analysis and policy evaluation we construct a search model with endogenous human capital and labor participation to study the growth effects of short run frictions and the effectiveness of human capital policies employment learning effort and output growth increase with more effective learning better labor market matching lower job separation or less costly vacancy creation although output growth employment vacancy creation and learning and search effort are most responsive to changes in a human capital policy that directly affects learning effort such a policy need not be more beneficial for welfare the effects of human capital policies become larger as the severity of labor market frictions rises

the role of exclusive territories in producers competition reprinted in cartels stephen salant ed the international library of critical writings in economics edward elgar reference collections

search theoretic models of the labor market a survey we survey the literature on search theoretic models of the labor market we show how this approach addresses many issues including the following why do workers sometimes choose to remain unemployed what determines the lengths of employment and unemployment spells how can there simultaneously exist unemployed workers and unfilled vacancies what determines aggregate unemployment and vacancies how can homogeneous workers earn different wages what are the tradeoffs firms face from different wages how do wages and turnover interact what determines efficient turnover we discuss various modeling choices concerning wage determination and the meeting process including recent models of directed search

excess capacity as a barrier to entry an empirical appraisal this paper examines excess capacity barriers to entry and investment dynamics in a sample of thirty eight chemical product industries logit and log linear models of investment behavior are estimated and specific case examples are considered the results show that incumbents rarely built excess capacity pre emptively in an effort to deter entry in general entrants and incumbents exhibited similar investment behavior

the case for permissive patents whatever its shortcomings in practice until very recently patent law has sought to embody the winner takes all principle this paper argues that it is both feasible and desirable to allow multiple prizes indeed it is possible that complete abolition of the patent system by raising the returns to late finishers would yield an improvement on the current situation

the economics of market dominance in this collection of essays industrial economists offer an in depth examination of dominant firms in competitive markets and the actions of authorities against such firms the volume opens with an essay by the editors which outlines the development of policy in different countries and gives an account of the main issues in the debate the contributors interpret recent policy developments in the united states britain and europe employ new aspects of oligopoly theory to challenge conventional wisdom about the detection of collusive pricing and defend profitability measurement as a useful tool for monopoly investigations other essays discuss the relevance of the new industrial economics and the persistence of monopoly firms

when do stronger patents increase continual innovation under continual innovation greater patent strength expands innovating firms profit against imitation but also shifts profit from current to past innovators we show how the impact of patents on innovation as determined by these two opposing effects varies with industry characteristics when the discount factor is sufficiently high the negative profit division effect is negligible and innovation monotonically increases in patent strength otherwise innovation has an inverted u relationship with patent strength and stronger patents are more likely to increase innovation when the discount factor or the fixed innovation cost is higher we also show how the impact of patents on innovation may change with firms innovation capability and with the intensity of competition from imitators

an empirical study of an auction with asymmetric information this paper examines federal auctions for drain age leases on the outer continental shelf from 1959 to 1969 these are leases that are adjacent to tracts on which a deposit has been discovered the authors find that the data strongly support the hypotheses that neighbor firms are better informed about the value of a lease than nonneighbor firms that neighbor firms coordinate their bidding decisions and that both types of firms bid strategically in accordance with the bayesian nash equilibrium model for first price sealed bid auctions with asymmetric information

what determines patent value insights from the semiconductor industry abstract this paper contributes to an understanding which impacts certain patent characteristics have on the value of patent rights in an exploratory study 127 individual patents from a semiconductor company were evaluated comprehensively by technical and marketing representatives the analysis of this rare data shows that for patents used as bargaining chips novelty and inventive activity are most important difficulty of inventing around and disclosure turn out to be of limited importance due to a selection bias the influence of patent age on its value cannot be determined the results hint at a differentiated theoretical plausibility of value indicators

turnover externalities with marketplace trading this article considers equilibrium decentralized trade when there is a marketplace where buyers and sellers meet costlessly since buyers have idiosyncratic match payoffs for each seller s good some buyers rather than trade with the current stock of sellers wait for new sellers to enter the marketplace to obtain a good they like a turnover externality exists where all traders are better off with higher entry rates of new traders furthermore this turnover externality supports multiple pareto rankable equilibria this provides new insights into similar results obtained in the random matching literature

what factors inspire the high entry flow in taiwan s manufacturing industries a count entry model approach why is the entry flow of the manufacturing sector extremely high in taiwan and does it contribute to the prevailing entrepreneurship this article aims to explore what factors inspire potential entrants to go into an industry based on a theoretical formulation of the poisson probability entry model a count data model is employed to investigate the determinants of entry flows the empirical results reveal that traditional entry barriers indeed lower the entry flow the entry incentives including price cost margin and industry growth play a lesser role at attracting new firms while alternatively the market size acts as a better proxy of an entry incentive in explaining entry flows incumbents responses to entry r d and advertising intensity are found to be associated with a significant negative impact on entry flows this article also finds that there is a higher bound of covariate of entry about 10 that can be attributed to the immeasurable personality of entrepreneurs entrepreneurship rather b

patents imitation and licensing in an asymmetric dynamic r d race abstract rd some may have an advantage in early stages of the r d process while others may have advantages in other stages of the process this paper uses a two firm asymmetric ability multistage r d race model to analyze the effect of patents imitations and licensing arrangements on the speed of innovation firm value and consumers surplus by using numerical analyses to study the mpe of the r d race the paper demonstrates the circumstances under which a weak patent protection regime that facilitates free imitation of any intermediate technology may yield a higher consumers surplus and total surplus than a regime that awards a patent for the final innovation the advantage of imitation may hold even when we allow for voluntary licensing of intermediate technologies

learning matching and growth we examine an endogenous growth model in which market frictions are an integral part of the economic environment workers invest in education when young which raises their productivity onice employed the level of schooling also acts as a key determinant of the rate of economic growth by influencing workers ability to accumulate additional human capital on the job once schooling is completed workers search for employment the division of the surplus between vacancies and searching workers is characterized as is the optimal level of education the economy may display multiple steady state growth paths

retraining and long term unemployment in a model of unlearning by not doing this paper develops a dynamically consistent model of search matching and bargaining when worker skills decline while unemployed long term unemployment emerges as an endogenous phenomenon even with constant returns to matching multiple pareto rankable equilibria are possible policies to address long term unemployment are best directed toward prevention e g vacancy creation subsidies rather than cure e g retraining subsidies

market frictions technology adoption and economic growth this paper develops an endogenous growth model with labor market matching and technology adoption while labor market search and entry frictions lengthen technology diffusion exogenous technology arrival may creatively destruct jobs in the short run such interrelationships give rise to multiple equilibria global and local indeterminacy under which a small autonomous technological improvement may create a large growth effect we characterize the effects of exogenous technology arrival on equilibrium matching adoption effort wage and the overall dispersion of wages social inefficiency arises as a result of individuals failure to account for free rider thick matching job destruction effects in making technology adoption decision

immigration skill heterogeneity and qualification mismatch we investigate the effects of us immigration on native workers in a search and matching environment that allows for skill heterogeneity differential search cost cross skill matching and imperfect transferability of human capital across borders we find that cross skill matching benefits the unskilled and hurts the skilled native workers similarly new unskilled immigration benefits the low skilled native workers and hurts the high skilled on the other hand new skilled immigration benefits both skilled and unskilled natives moreover when we simulate the effects of the actual us immigration influx that took place between the years 2000 and 2009 we find that both skilled and unskilled native workers gain we also find that initially an improvement in the transferability of human capital benefits the high skilled natives at the expense of the low skilled nevertheless below a certain overeducation ratio further improvements in the transferability of human capital make both types of native workers worse off

innovation threats and strategic responses in oligopoly markets this paper deals with the strategic reaction of firms to competitive threats stemming from newly developed products of actual competitors product innovation projects go through multiple time consuming stages with several continuation termination decisions hence competitors can react to the threat before the new product is introduced and thereby may prevent or facilitate the product s introduction we consider a duopoly model where firm 1 can start a two stage product innovation project for obtaining a horizontally and vertically differentiated product in between the two stages firm 2 can react by making an investment that improves the competitive position of the current product we find that under weak vertical differentiation firm 2 wants firm 1 to innovate horizontal differentiation softens competition and firm 2 over invests to induce firm 1 to launch the new product second under strong vertical differentiation firm 1 starts the product innovation project triggering under investment by firm 2 but never finishes it the under investment makes firm 2 a weaker competitor which induces firm 1 not to innovate third under very strong vertical differentiation firm 2 prevents a launch of the new product by over investing this results in a strong competitive position of firm 2 it therefore captures such a big market share that firm 1 will not introduce the new product the situation of firm 1 in the old market has worsened the option to complete the innovation created by initiating the first stage of the innovation project has a negative value for firm 1

an explanation of international differences in education and workplace training abstract we develop a simple search equilibrium model of workplace training and education based on two features first investment in education improves job related learning skills and reduces training costs by firms second firms with vacant skilled job slots can choose between recruitment from the market and training compared to germany and japan the us has both a higher inflow rate into unemployment and a higher efficiency of the matching process while the combined effect of these differences on the share of educated labor is ambiguous the effect on the percentage of firms undertaking workplace training is to unambiguously reduce it

incumbent positioning as a determinant of strategic response to entry existing research has identified different firm characteristics that determine an incumbent s reaction toward market entrants this study widens the perspective from a firm s absolute attributes to its relative positioning within its competitive environment the hypotheses for the empirical analysis are derived from game theoretic models with either vertical or horizontal product differentiation in each of the two theoretical models two incumbents initially choose very different quality and variety levels respectively and move closer to the center when faced by entry of a competitor from the vertical differentiation model we predict a stronger price reduction by high quality firms in our empirical analysis we are using a novel dataset of the high quality restaurant market in germany to test the theoretical findings while the hypotheses with respect to adjustments of prices and varieties are supported we do not find empirical evidence for the predicted quality adjustment

on the effectiveness of patenting strategies in innovation races which if any of a firm s inventions should it patent should it patent at all many companies engaged in an innovation race seek a patenting strategy that balances protection of their intellectual property against the knowledge spillovers resulting from disclosure requirements not much is known about factors that determine the patenting strategy best able to resolve this trade off although scholars in various management economics and engineering disciplines have researched patents and patenting regimes little work has addressed the normative issues that pertain to forming an appropriate firm level patenting strategy we develop an inventory of real life patenting strategies and integrate them into a coherent framework our simulation model characterizes the optimal patenting choices for different environmental and firm level contingencies while capturing the dynamics between competing firms we identify the firm s research and development strategy as the most salient determinant of its optimal patenting strategy our research contributes to establishing a contingency theory of patenting strategies this paper was accepted by david hsu entrepreneurship and innovation

strategic entry deterrence in analyzing deterrence of large scale entry two classes of entry barriers may be distinguished an innocent entry barrier is unintentionally erected as a side effect of innocent profit maximization in contrast a strategic entry barrier is purposely erected to reduce the possibility of entry two types of innocent barriers may also be distinguished a postentry absolute advantage has the property that if entry did occur the established firm would be at a profit advantage over the entrant examples are superior technology or product design patents and lower input prices a preentry asymmetry advantage arises from the fundamental preentry asymmetry between established firm and potential entrant before the entrant makes his entry decision the established firm has already committed resources this prior existence gives first move advantages the preentry asymmetry is independent of symmetry or asymmetry in the rules the equilibrium concept of the postentry game that might ensue even if the postentry game will be played according to nash cournot or entrant as leader rules the preentry leadership

the role of potential competition in industrial organization potential competition has been recognized as a mechanism to control the exploitation of market power at least since the work of j b clark 1902 but it was not until 50 years later that economists most notably joe bain and paolo sylos labini refocused attention on the idea with inputs from the theories of imperfect competition optimal control and dynamic games their work evolved into ever more sophisticated models of the reactions of existing competitors to the threat of new competition although the most appropriate models of competitive interaction are those which begin with a specific industry a number of theories have been proposed which attempt to develop more general conclusions my purpose in this paper is to develop an understanding of the strengths and limitations of these alternative theories by examining the available theoretical empirical and institutional knowledge rather than attempt the sisyphean task of recounting every model which relates conditions of entry and market performance i have partitioned the analysis into four major schools of thought according to their most central propositions these are the traditional model of limit pricing dynamic limit pricing the theory of contestable markets and the market efficiency model traditional limit pricing models rest on the assumption that firms respond to entry but are able to earn persistent profits when the structural characteristics of markets make entry difficult dynamic limit pricing is similar but emphasizes that markets can only be temporarily protected from entry contestability theory in its pure form asserts that potential competition is as effective as actual competition in controlling market performance the efficient markets hypothesis broadly interpreted states that markets are workably competitive and that the market structure reflects differential efficiency not strategic behavior while one can construct many other hypotheses about potential competition these classifications

strategic behaviour of incumbent firms in the uk abstract the main purpose of this paper is to examine the incidence of strategic behaviour in the uk by means of a questionnaire study performed across three broad manufacturing industries food electrical engineering and chemicals of the strategies which have received substantial theoretical attention r d and advertising appear widely used patenting pricing and excess capacity much less so vertical instruments such as purchasing policy also stand out as important but possibly only a minority of firms in our sample actively pursue strategic instruments

noisy advertising and the predation rule in antitrust analysis can advertising by dominant firms pose a predatory threat theoretically the answer clearly is yes however empirical evidence indicating the importance of this theoretical finding is largely missing economists empirical studies of advertising which typically focus on the question of whether high levels of advertising are indicative of the presence of a barrier to entry or signal that advertising information can substitute for consumption experience usually employ average advertising levels that hide strategically focused price cuts or changes in short term advertising rates

heterogeneous borrowers liquidity and the search for credit abstract we develop a general equilibrium model of credit formation where borrowers and lenders must search for matches and where the composition of borrowers adjusts to satisfy equilibrium entry conditions when market liquidity dries up as a result of fundamental shocks to the system fewer borrowers will participate in the credit market with low quality borrowers suffering disproportionately because of a flight to quality however less liquid credit markets need not be associated with lower social output because the effect of higher average quality may outweigh that of reduced market participation depending crucially on the source of the liquidity shock

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

oligopoly and welfare a unified presentation with applications to trade and development abstract we develop a unified sequence of models to examine the determinants of price output profitability and concentration for different kinds of oligopolistic market we relate various magnitudes of significance to judges of welfare and to policy makers such as consumer surplus profit or added benefits of employment or trade surplus to observable magnitudes such as the size and concentration of the market it emerges that various appropriately formulated herfindahl indices are useful in several of these relations we attempt to present results in a way that is useful for empirical investigations and pay particular attention to applications in trade and development

on limiting or encouraging rivalry in technical progress the effect of patent scope decisions abstract this essay is on the effects of the scope of a patent e g how broad its allowed claims on subsequent inventing in a field it is argued that this depends on the topography of technical advance in a field in particular on how inventions are linked to each other and in the extent to which rapid technical advance requires a diversity of actors and minds as contrasted with being facilitated by express coordination of inventive activity technical advance is examined in several different fields with a focus on how patents influenced the pace and quality of development the authors conclude that allowing and enforcing broad patent claims tends to hinder technical progress

advertising and limit pricing we enrich milgrom and roberts 1982 limit pricing model to allow an incumbent to signal his costs with both price and advertisements our fundamental result is that a cost reducing distortion occurs in that the incumbent behaves as if there were complete information but his costs were lower than they are preentry price is therefore distorted downward and demand enhancing advertising is distorted upward as a consequence of signalling if advertising is a purely dissipative signal it is not used nor therefore distorted recent refinements of the sequential equilibrium concept are featured

real effects of money growth and optimal rate of inflation in a cash in advance economy with labor market frictions this paper studies the consequences of labor market frictions for the real effects of steady inflation when cash is required for households consumption purchases and firms wage payments money growth may generate a positive real effect by encouraging vacancy creation and raising job matches this may result in a positive optimal rate of inflation particularly in an economy with moderate money injections to firms and with nonnegligible labor market frictions in which wage bargains are not efficient this main finding holds for a wide range of money injection schemes with alternative cash constraints and in a second best world with pre existing distortionary taxes

welfare optimal patent royalties when imitation is costly we identify welfare optimal patent royalties in a model of costly imitation entry and imperfect competition when the social planner may impose a compulsory license optimal royalties either blockade imitation facilitating unregulated monopoly or yield an aggregate zero profit efficient duopoly when duopoly is optimal the optimal per unit royalty pins the equilibrium price at the aggregate average cost and the optimal fixed royalty shifts surplus so the patentee and imitator break even efficient duopoly yields higher welfare than monopoly for sufficiently low invention cost and may also yield higher welfare than a prize system interestingly royalty payments may be negative because of this efficient duopoly may not be feasible if the planner must instead direct the courts to use such royalties

decentralized international exchange traditional models of international trade take place within trading environments in which trade is coordinated by a walrasian auctioneer who instantly matches buyers and sellers in world markets this assertion seems inconsistent with evidence suggesting that trading arrangements seem to economize on transactions costs associated with international trade recognizing these insights we depart from standard models of international trade by incorporating the difficulties in the coordination of exchange within a two country random matching model of international trade we capture a motivation for trade through comparative advantage and interpret trade across economies to be associated with an agent s endogenous choice to participate in foreign markets although an individual may decide to search abroad to obtain additional gains from trade resulting from comparative advantage she is less likely to meet trading partners abroad as search frictions are higher in the foreign country than in the domestic market using this framework we show that international trade is associated with convergence in relative prices across countries we also show that the extent of market frictions in the foreign country affects relative prices the volume of international trade and welfare levels due to market participation externalities associated with international trade we show that a movement from autarky to free trade may actually lower welfare levels we conclude by examining the possible inefficiencies associated with international trade due to the decentralized nature of exchange and the policy implications of our model

educational policy in a credit constrained economy with skill heterogeneity an overlapping generations model where agents choose whether to become educated when young is presented education enhances productivity but needs to be financed by borrowing because of the possibility of default lenders may ration credit we characterize the steady state equilibrium with and without credit constraints and show that credit constraints are associated with lower education and a lower real interest rate we then study the role of public policy in remedying the inefficiency which occurs with credit market imperfections and examine whether public education can improve on the constrained equilibrium

financial matching asymmetric information and entrepreneurial risk taking we study financial matching in credit markets when entrepreneurs have private information about their success potential entrepreneurs can search for financing for either a risky or a safe investment and only the risky project is sensitive to entrepreneurs intrinsic types there is excess risk taking in the sense that entrepreneurs with inefficiently low success probabilities choose the risky investment however steady states featuring greater market liquidity are associated with higher efficiency as market liquidity also reflects the intensity of competition among financiers earlier results which indicate a negative relationship between competition and allocative efficiency do not hold in our setup

social welfare and income inequality in a system of cities abstract this paper develops a general equilibrium model of a system of core periphery cities to examine the main determinants of intra and inter regional income disparities the economy is populated by a continuum of homogeneous unskilled and heterogeneous skilled workers unskilled workers whose wages are determined competitively specialize in food production in local cities skilled workers whose wages are determined according to a nash bargain manufacture a high tech commodity in the metropolis we establish conditions under which this core periphery equilibrium spatial configuration emerges we show that both intra and inter regional income disparities are present the determinants of each type of disparity and the social welfare implications are fully investigated our results suggest that public policy programs that improve income equality may not be necessarily welfare enhancing

spatial mismatch in search equilibrium we construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis a higher rate of unemployment for central city residents than suburban residents a higher job vacancy rate for suburban firms and reverse commuting and higher suburban wages the effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined

how broad should the scope of patent protection be i explore the trade off between a patent s length that is its lifetime and its width that is its scope of coverage a wider patent generally reduces the distortion of consumers choices between the patented brand of the product and unpatented lower priced varieties sold by competitors but also permits higher prices which increase relative to profits the deadweight losses from consumers switching consumption out of the product class i show under what conditions infinitely lived but very narrowly focused patents are the socially efficient way to reward innovation and under what conditions very short lived but very broad patents are optimal

patent protection and r d with endogenous market structure in a model with endogenous number of innovating firms we show that whether patent protection increases r d investment is ambiguous and depends on the market demand function and the cost of r d if the market size increases with number of firms patent protection reduces r d investment if the cost of r d is sufficiently high and higher product differentiation increases the possibility of lower r d investment under patent protection if the market size does not increase with number of firms patent protection never reduces r d investment we find that welfare is lower under patent protection than under no patent protection

adaptability productivity and educational incentives in a matching model abstract we study the connections between the labour market and the education sector in a matching framework with ex post wage bargaining workers have multidimensional skills and the search market is segmented by technology education is a time consuming activity and determines jointly the scope or adaptability and intensity or productivity of individual skills we establish three main results first unemployment provides incentives to schooling by raising the need for adaptability second private returns to productivity are below social returns but no hold up phenomenon is involved third due to wage and congestion externalities private returns to adaptability exceed social returns as a consequence both over and under education may take place in equilibrium

liquidity risk economic development and the effects of monetary policy abstract empirical evidence indicates that monetary policy is not super neutral in many countries in particular in high inflation economies inflation is negatively related to economic activity by comparison inflation may be positively correlated with output in low inflation countries we present a neoclassical growth model with money in which the incidence of liquidity risk is inversely related to aggregate capital formation interestingly there may be multiple monetary steady states where the effects of monetary policy vary in poor economies the financial system is highly distorted and higher rates of money growth are associated with less capital formation in contrast in advanced economies a tobin effect is observed since inflation exacerbates distortions from a coordination failure in the low capital steady state individuals become much more exposed to liquidity risk consequently optimal monetary policy depends on the level of development

novelty and disclosure in patent law the stringency of the novelty requirement in patent law affects the pace of innovation because it affects the amount of technical information that is disclosed among firms it also affects ex ante profitability of research we compare weak and strong novelty requirements from the standpoint of social efficiency we ask how our answer depends on the rule that determines which firm gets a patent when two firms have patents pending on the same technology the possible rules are first to invent which applies in the u s and first to file which applies everywhere else

the economics of new blood abstract we construct a dynamic general equilibrium model of search and matching where public knowledge grows through time and workers accumulate a fraction of this knowledge through education retraining due to search delays the unemployment pool is populated by vintages of workers of differing productivities through intergenerational rivalry the human capital of older generations is rendered obsolete relative to that of the new blood higher knowledge growth exacerbates intergenerational competition thereby lowering education and growth while raising unemployment and inequality these findings help explain wage compression expansion and the hump shaped wage tenure profile across cohorts

search frictions market power and long run growth abstract this paper embeds product market search in an ak growth model to study the effects of search frictions on market structure capital accumulation and long run growth the basic hypothesis is that search frictions in giving rise to market power result in higher prices and lower output levels the falling demand for capital stemming from firms cutting back output then lowers the interest rate dampening capital accumulation and slowing down growth a decline in search frictions sets the process in reverse eventually speeding up growth through the change in market structure in the meantime the stock market values of firms could fall

search wage bargains and cycles in this paper i describe an equilibrium model of job matchings with perfect foresight that has the following property the number of people looking for work changes temporarily when there is a temporary shock to the value of labour s marginal product it does not change when the shock is permanent by contrast real wages change temporarily by a small amount when the shock is temporary but change permanently and by a bigger amount when the shock is permanent thus the model offers an explanation for the observation that over the cycle small wage changes are associated with changes in unemployment whereas secularly wage growth does not seem to affect the rate of unemployment the two most common explanations for this observation in the literature the phelps lucas misperceptions model and the lucas rapping intertemporal substitution model are well grounded in equilibrium theory but they have not stood up well to empirical testing the misperceptions model requires more ignorance of aggregate changes than can be reasonably assumed whereas the intertemporal substitution model requires bigger wage elasticities of labour supply than those estimated in the model of this paper neither misperceptions nor changes in the supply of labour play a role in generating the unemployment cycle all agents observe the shocks when they occur and they anticipate correctly the economy s adjustment path but like the new classical explanations of the cycle the model is an equilibrium one in the sense that all private gains from trade are fully exploited at all phases of the cycle although the social gains from trade may not be fully exploited because of search externalities the cycle i derive here is not due to externalities unlike other related perfect foresight models such as diamond s 1982a the structure of the model is such that the externalities do not give rise to multiple equilibria the key element of the model which is responsible for the transmission of output shocks to unemployment is the equation for wages in markets where the allocation of jobs takes place through search both firms and workers have some monopoly power a point emphasised by mortensen 1970 though he attributed only temporary monopoly power and only to firms i use the nash bargaining solution to solve for the equilibrium wage rate and show that the firm s and worker s alternative returns threat points or

worker financed versus firm sponsored training how are skilled workers supplied to the economy a search and matching model of general human capital is developed to contrast worker financed training with firm sponsored training to evaluate which type of training might prevail in the economy it will be shown that firm sponsored training is more likely to occur when there is greater friction in the labour market whereas worker financed training prevails in a less frictional market moreover the model has multiple equilibria in labour markets with intermediate friction comparative statistics exercises tell us that reductions in labour market friction result in less firm sponsored training in the economy but encourage worker financed training

patent breadth in an international setting we examine the nash equilibria of a game where two national governments set patent breadth strategically broader patents make r d more attractive but the effect on static efficiency is nonmonotonic in a north south model where only the north can innovate harmonization of patent breadth lowers welfare relative to the nash equilibrium when both countries can innovate harmonization toward narrower patent breadth may raise world welfare jel f02 f13 o3 o31 o32

innovation incentives through third degree price discrimination in a model of patent breadth abstract in a model of patent breadth generating linear demand functions it is shown that if a potential inventor has to be given an innovation incentive this is better done by permitting him to price discriminate than requiring uniform prices