fraudulent financial reporting and technological capability in the information technology sector a resource based perspective motivated by the disproportionately high incidence of fraudulent financial reporting in the it sector where technological capability is a major source of competitive advantage this study investigates the possible relationship between technological capability and fraud probability in the it sector technological capability is measured by a firm s technical efficiency relative to peers in transforming cumulative r d resources into innovative output which is a source of competitive advantage according to the resource based view rbv of the firm technical efficiency is estimated via data envelopment analysis a sample of fraud firms taken from accounting and auditing enforcement releases is matched with control samples of non fraud firms consistent with the rbv technological capability is found to have a negative and economically significant effect on fraud probability moreover fraud probability is insignificantly associated with the scale efficiency of innovative activities as investment in r d resources per se is not a source of sustainable competitive advantage

social networks and the process of globalization we propose a stylised dynamic model to understand the role of social networks in the phenomenon we call globalization this term refers to the process by which even agents who are geographically far apart come to interact thus being able to overcome what would otherwise be a fast saturation of local opportunities a key feature of our model is that the social network is the main channel through which agents exploit new opportunities therefore only if the social network becomes global heuristically it reaches far in few steps can global interaction be steadily sustained to shed light on the conditions under which such a transformation may or may not take place is the main objective of the paper one of the main insights arising from the model is that in order for the social network to turn global the economy needs to display a degree of geographical cohesion that is neither too high for then global opportunities simply do not arise nor too low then the meeting mechanism displays too little structure for the process to take off but if globalization does materialize we show that it is a robust state of affairs that often arises abruptly as key parameters change this occurs in particular as the rate of arrival of ideas rises or when there is a high enough increase in the range at which the network transmits information

the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

collusion in multiproduct oligopoly games under a finite horizon applying recent results on finitely repeated games to oligopoly theory the author finds that there exists a class of finite horizon output games in which collusion can be achieved as a subgame perfect equilibrium trigger strategies prevent defection from the cooperative outcome by credibly threatening that the defector will be forced to exit the industry for the case of a multiproduct oligopoly it is shown that collusion in one market can be enforced by the threat of punishment in a second market if someone defects even though the two markets are structurally independent the firms make them strategically interdependent through their strategies copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

lone inventors as sources of breakthroughs myth or reality are lone inventors more or less likely to invent breakthroughs recent research has attempted to resolve this question by considering the variance of creative outcome distributions it has implicitly assumed a symmetric thickening or thinning of both tails i e that a greater probability of breakthroughs comes at the cost of a greater probability of failures in contrast we propose that collaboration can have opposite effects at the two extremes it reduces the probability of very poor outcomes because of more rigorous selection processes while simultaneously increasing the probability of extremely successful outcomes because of greater recombinant opportunity in creative search analysis of over half a million patented inventions supports these arguments individuals working alone especially those without affiliation to organizations are less likely to achieve breakthroughs and more likely to invent particularly poor outcomes quantile regressions demonstrate that the effect is more than an upward mean shift we find partial mediation of the effect of collaboration on extreme outcomes by the diversity of technical experience of team members and by the size of team members external collaboration networks supporting our meta argument for the importance of examining each tail of the distribution separately experience diversity helps trim poor outcomes significantly more than it helps create breakthroughs relative to the effect of external networks

the colorblind crowd founder race and performance in crowdfunding the dearth of minority entrepreneurs has received increasing media attention but few academic analyses in particular the funding process creates challenges for either audit or correspondence methods making it difficult to assess the role or type of discrimination influencing resource providers we use a novel approach that combines analyses of 7 617 crowdfunding projects with an experimental design to identify whether african american men are discriminated against and whether this reflects statistical taste based or unconscious bias on the part of prospective supporters we find that african american men are significantly less likely than similar white founders to receive funding and that prospective supporters rate identical projects as lower in quality when they believe the founder is an african american male we conclude that the reduction in perceived quality does not reflect conscious assumptions of differences in founder ability or disamenity but rather an unconscious assumption that black founders are lower quality in two additional experiments we identify three means of reducing this bias through additional evidence of quality via third party endorsements i e awards evidence of prior support through evidence that african american founders have succeeded previously and by removing indicators of the founder s race the online appendix is available at https doi org 10 1287 mnsc 2017 2774 this paper was accepted by toby stuart entrepreneurship and innovation

building up social capital in a changing world this paper models the dynamic process through which a large society may succeed in building up its social capital by establishing a stable and dense pattern of interaction among its members in the model agents interact according to a collection of idyosincratic infinitely repeated prisoner s dilemma played on the existing social network this network not only specifies the playing partners but crucially also determines how relevant strategic information diffuses or new cooperation opportunities are found over time the underlying payoffs randomly change i e display some volatility in response to it agents react by creating new links and removing others this combines into a complex but ergodic dynamic process whose analysis is undertaken in different ways first we rely on its ergodicity to compute numerically its long run regularities second we use mean field approximations to derive analytical results both routes are found in accord and also complementary the long run dynamics of the process sharply depends on environmental volatility displaying the following features a only if volatility is not too high can the society sustain a dense social network and thus attain a large average payoff b the social architecture endogenously responds to increased volatility by becoming more cohesive c network based strategic effects are an essential buffer that preclude the abrupt collapse of the social network in the face of growing volatility these conclusions are largely in tune with the points stressed in the social capital literature

when strong ties are strong networks and youth labour market entry the conditions under which young workers find their first real post graduation jobs are important for their future careers and insufficiently documented given their potential importance for young workers welfare to study these conditions and in particular the role played by social ties we use a swedish population wide linked employer employee data set of graduates from all levels of schooling that includes detailed information on family ties neighbourhoods schools class composition and parents and children s employers over a period covering years with both high and low unemployment together with measures of firm performance we find that strong social ties parents are an important determinant for where young workers find their first job the effects are larger if the graduate s position is weak low education bad grades during high unemployment years and when information on potential openings are likely to be scarce on the hiring side by contrast the effects are larger if the parent s position is strong long tenure high wage and if the parent s plant is more productive the youths appear to benefit from the use of strong social ties through faster access to jobs and by better labour market outcomes as measured a few years after entry in particular workers finding their entry jobs through strong social ties are considerably more likely to remain in this job while experiencing better wage growth than other entrants in the same plant firms also appear to benefit from these wage costs relative to comparable entrants starting at a lower base they also benefit on the parents side parents wage growth drops dramatically exactly at the entry of one of their children in the plant although this is a moment when firm profits tend to be growing indeed the firm side benefits appear large enough for at least small firms to increase job creation at the entry level in years when a child of one of their employees graduates

innovation outcomes in a distributed organization intrafirm mobility and access to resources prior research has established a relation between intrafirm mobility and innovation outcomes at distributed organizations the literature has also uniformly agreed on the mechanism underlying this relationship the sharing of tacit knowledge and recombination of ideas that occurs because of intrafirm mobility but a second mechanism may also be at work intrafirm mobility might help distant employees secure access to resources for their innovative projects using unique data on travel employment and patenting for 1 315 inventors at the indian research and development r d center of a fortune 50 multinational i find that intrafirm mobility in the form of short duration business trips from a distant r d location to headquarters is positively related to higher subsequent patenting at the individual level i also find mobility immediately prior to meetings at which r d funds are most likely to be disbursed to be related to higher subsequent patenting this study sheds new light on how intrafirm mobility a

entry exit and performance in airline markets abstract data from the airline industry indicate that 1 entry generally is not induced by price levels substantially above the norm 2 entry reduces fares and increases output and exit increases fares and reduces output and 3 incumbents cut price and maintain output in response to entry and survivors increase both price and output in response to exit these findings cast doubt on the ability of entry to prevent or reverse price increases from anticompetitive mergers

international evidence on the sources of macroeconomic fluctuations abstract this paper examines the causes of macroeconomic fluctuations in five economies germany japan sweden the united kingdom and the united states using a bivariate var model for output and inflation the results demonstrate that both demand and supply shocks are important sources of business cycle fluctuations moreover at the business cycle frequency there are strong similarities between germany the united kingdom and the united states where more than 50 percent of the forecast error variance in both output and inflation are due to supply shocks on the other hand in japan and sweden over 90 percent of the error variance in output and less than 20 percent of the error variance of inflation are due to supply shocks

interfirm relationships and informal credit in vietnam trading relations in vietnam s emerging private sector are shaped by two market frictions the difficulty of locating trading partners and the absence of legal enforcement of contracts examining relational contracting we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier a longer duration of trading relationship is associated with larger credit as is prior information gathering customers identified through business networks receive more credit these network effects are enduring suggesting that networks are used to sanction defaulting customers

diversification multi market contact and profitability this paper analyses the relationships between diversification multi market contact and industry profitability it focuses on the link between diversification and multi market contact to show that when diversification establishes or increases the extent to which firms meet in more than one market the effect of such multi market contact is to increase the possibility that collusion emerges as an evolutionary stable strategy as a result multi market contact may increase the potential for tacit collusion and so lead to higher profitability the effects of diversification and multi market contact on the price cost margin and the rate of return to capital are estimated using a specially constructed new database for uk manufacturing industry in 1979 this database provides information on the diversification and multi market contact of 418 firms across 134 manufacturing industries thus linking firm and industry level data the results show a clear positive effect of multi market contact on industry profitability

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

fiscal shocks and real exchange rate dynamics some evidence for latin america this paper analyses the effects of fiscal shocks using a two country macroeconomic model for output labour input government spending and relative prices which provides the orthogonality restrictions for obtaining the structural shocks dynamic simulation techniques are then applied in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate in the case of six latin american countries using quarterly data over the period 1980 2006 we find that in a majority of cases fiscal shocks are the main driving force of real exchange rate fluctuations

sources of economic fluctuations in the united states there has been much recent discussion about the ultimate sources of macroeconomic variability a number of authors attribute most of this variability to only a few sources sometimes only one although there may be only a few important sources this is far from obvious since economies seem complicated the purpose of this paper is to provide quantitative estimates of various sources of variability using a u s econometric model stochastic simulation is used to estimate how much the overall variances of real gnp and the gnp deflator are reduced when various shocks are suppressed in the model

competitive advantage and collusive optima cost differences may often be important in real oligopolies if side payments are impossible the standard cartel objective total industry profits lacks plausibility when costs differ this essay considers plausible alternatives four different technologies for effecting collusion which are essentially identical when costs are equal define sets of possible profits axiomatic bargaining models are used to select unconstrained optima from among these possibilities simple functional forms are employed low cost firms with large shares in cournot equilibrium may have little to gain from collusion if collusion is effective low cost firms will have relatively low estimated conjectural variations

catching up by hiring the case of huawei hiring experts in centers of state of the art technology is an important way in which a multinational enterprise mne can gain competitive advantage and yet use of this mechanism remains under researched this study uses the case of a chinese mne that recently achieved a leading position in the telecommunications market huawei technologies taking the perspective of huawei s offshore hires i find that greenfield investments contributed to overcoming liabilities of origin and outsidership in the global telecommunications industry nevertheless even now that huawei has caught up with industry incumbents its output capabilities remain dependent on the innovation capabilities of its offshore experts

trade costs and multimarket collusion contrary to conventional wisdom this article argues that trade liberalization may facilitate collusion and reduce welfare with the help of a duopoly model in which firms interact repeatedly in multiple markets we first show that if trade costs i e tariffs transport costs and discount factors are not too high efficient cartel agreements necessitate the cross hauling of goods as that entails lower deviation incentives in this setting we then demonstrate that reciprocal trade liberalization always raises total output when trade costs are within a range whose lower bound exceeds a threshold level but may reduce total output and thus be pro collusive when trade costs are below that threshold level

cooperation through imitation and exclusion in networks we develop a simple model to study the coevolution of interaction structures and action choices in prisoners dilemma games agents are boundedly rational and choose both actions and interaction partners via payoff biased imitation the dynamics of imitation and exclusion yields polymorphic outcomes under a wide range of parameters whenever agents hold some information beyond their interaction neighbors defectors and cooperators always coexist in disconnected components otherwise polymorphic networks can emerge with a center of cooperators and a periphery of defectors any stochastically stable state has at most two disconnected components simulations confirm our analytical results and show that the share of cooperators increases with the speed at which the network evolves increases with the radius of interaction and decreases with the radius of information

cooperation punishment and immigration abstract we study the incentive to cooperate in a society comprised of citizens and immigrants the level of cooperation is governed by a steady state under population dynamics along with the behavior of individual citizens and immigrants we provide an equilibrium characterization exhibiting a uniquely determined positive level of cooperation in society we then use this framework to study the impact of government programs aimed at punishing immigrants who defect when agents produce offspring we show that a consequence of such punishment is that while the incentive for immigrants to defect decreases there is an equilibrium substitution effect whereby citizens realize an increased incentive to defect

a laboratory investigation of networked markets when contracts are not perfectly enforceable can interpersonal networks improve market efficiency we introduce certain exogenous networks into laboratory markets in which traders can cheat in international but not in domestic transactions we examine four network configurations one of which has the potential to achieve 100 efficiency theoretical upper bounds correctly predict the main qualitative trade patterns across our network configurations but overpredict observed efficiency our networks increase international trade volume reduce domestic volume and divert high surplus transactions to international networks

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

uncertain intellectual property conditions and knowledge appropriation strategies evidence from the genomics industry innovating science and technology based firms often endure a sustained period of uncertain intellectual property rights ipr protection before patents could be granted to their valuable knowledge assets this problem is exacerbated as firms increasingly develop their innovations or operate in countries with weak ipr institutional environments but how does ipr uncertainty affect firms strategy toward knowledge appropriation capturing of economic value from their knowledge assets and toward providing access to these knowledge assets drawing on research from the economics of science and intellectual property strategy we examine this question using a novel panel data covering 362 firms and organizations in the knowledge intensive genomics industry based on all genomics patents and matching papers from 1988 to 2005 we find that under uncertain ipr conditions firms reveal and accumulate more knowledge through open science follow on publishing but shift to knowledge appropriation through commercial science follow on patenting when ipr uncertainty is narrowed this effect is most salient when firms develop their knowledge assets or operate under strong ipr institutional regime for highly science based knowledge assets firms continue tapping into open science for access and reciprocity in knowledge acquisition from the scientific community these findings highlight the role of patent grant as a potential lever to shape firms knowledge processes and long term innovative capacity and the emergence of a concerted science strategy employed by firms

matchmaker matchmaker the effect of old boy networks on job match quality earnings and tenure firms often view job applicant referrals from current employees as more informative than direct applications or referrals through formal labor market intermediaries such as placement firms we argue that old boy networks reduce employers uncertainty about worker productivity using jovanovic s job matching model we show that workers hired through the old boy network should 1 earn higher initial salaries 2 experience lower subsequent wage growth on the job and 3 stay on the job longer than otherwise comparable workers hired from outside the network we find considerable support for this theory using data from the 1972 survey of natural and social scientists and engineers

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

research productivity over the life cycle evidence for academic scientists the relationship between age and the publishing productivity of ph d scientists is analyzed using data from the survey of doctorate recipients national research council and the science citation index the longitudinal nature of the data allows for the identification of pure aging effects in five of the six areas studied life cycle aging effects are present only in particle physics where scientists often speak of being on a religious quest is the indication that scientific productivity is not investment motivated vintage effects are also considered the expectation that the latest educated are the most productive is not generally supported by the data copyright 1991 by american economic association

recruitment knowledge integration and modes of innovation abstract this paper investigates how the strength and intrinsic characteristics of firms knowledge bases and processing routines have evolved with the past inflow of employees the empirical analysis is based on linked public register and innovation survey data for norway it finds that recruitment from universities research institutes and higher education institutions has increased the capacity of firms to generate technical inventions yet the organizational knowledge bases and processing routines on which commercial innovation output depends have been strengthened only by the recruitment that has occurred from related industries implications for research management and policy are drawn

adopting knowledge from reverse innovations transnational patents and signaling from an emerging economy is there knowledge adoption of innovations from emerging economies we theorize that to help overcome information asymmetry across countries granting patents to technology in the emerging economy of china can serve as a signal of technology potential and market opportunity to enhance technological knowledge adoption in a developed economy such as the united states the effect may be greater in a complex technology sector with high information asymmetry than in a discrete technology sector and in regions with less developed market intermediaries where information asymmetry is high our difference in differences estimates using 4226 china u s patent dyads and comparable u s patents support our hypotheses

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

impulse response analysis of cointegrated systems abstract impulse response or dynamic multiplier analysis of vector autoregressive systems with cointegrated variables is considered the asymptotic distribution of the responses estimated with johansen s 1988 maximum likelihood procedure is derived the results are illustrated with an analysis of a west german money demand system the investigation shows that a direct interpretation of the cointegration relations may be difficult or misleading thereby the virtue of impulse response analysis for applied work is illustrated

macroeconomic fluctuations demand or supply permanent or temporary abstract we use generalized method of moments to estimate a rational expectations aggregate demand aggregate supply macroeconomic model for five european economies and the united states our aim is to examine whether supply or demand shocks have predominated in these economies during the post war era and whether shocks of either type have been primarily temporary or permanent in nature we find that permanent or temporary demand shocks have been the dominant source of variance in output growth in all six countries but there is a less consistent pattern for inflation permanent supply shocks had the dominant influence on autocorrelations

a traditional interpretation of macroeconomic fluctuations under the traditional interpretation of macroeconomic fluctuations aggregate demand shocks move output and prices in the same direction while aggregate supply shocks move output and prices in opposite directions this paper examines the joint behavior of u s output unemployment prices wages and nominal money and asks whether it is consistent with this interpretation the answer is a qualified yes

the effects of monetary policy in japan this article interprets time series facts regarding the sources of business fluctuations in japan and attempts to uncover possible characteristics of the effects of monetary policy over the last two decades it argues that given the institutional features of the bank of japan s operating procedures a simple recursive vector autoregressive var model that consists of interest rates money stock prices and output all in first differences may serve as a useful benchmark for japan the main finding is that monetary policy shocks in fact have a persistent effect on real output especially in the rise and fall of japan s bubble economy in the late 1980s

overcoming incentive constraints by linking decisions consider a bayesian collective decision problem in which the preferences of agents are private information we provide a general demonstration that the utility costs associated with incentive constraints become negligible when the decision problem is linked with a large number of independent copies of itself this is established by defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences and then arguing that agents incentives are to satisfy their budget by being as truthful as possible we also show that all equilibria of the linking mechanisms converge to the target utility levels the mechanisms do not require transferable utility or interpersonal comparisons of utility and are immune to manipulations by coalitions

permanent and transitory components in macroeconomic fluctuations fluctuations in real gnp have traditionally been viewed as transitory deviations from a deterministic time trend the purpose of this paper is to review some of the recent developments that have led to a new view of output fluctuations and then to provide some additional evidence using post war quarterly data it is hard to reject the view that real gnp is as persistent as a random walk with drift we also consider the hypothesis that the recent finding of persistence are due to the failure to distinguish the business cycle from other fluctuations in real gnp we use the measured unemployment rate to decompose output fluctuations we find no evidence for the view that business cycle fluctuations are more quickly trend reverting this abstract was borrowed from another version of this item

clustering cooperation and search in social networks the paper discusses the important role of clustering in the evolution of social networks as it affects not only the incentives of players to cooperate but also their ability to search for fresh opportunities depending on the volatility of the environment and the social convention in place we show that network clustering endogenously adapts to achieve and maintain to the extent possible a state of high social connectivity in the long run jel c71 d83 d85

inefficiencies in a model of spatial networks formation with positive externalities abstract in this paper we make an exploratory use of computational techniques genetic algorithms and monte carlo simulations to compute efficient and emergent networks in a spatialized version of the connections model of jackson and wolinski jackson m o wolinski a 1996 a strategic model of social and economic networks journal of economic theory 71 44 74 this approach allows us to observe and discuss inefficiencies that arise in a strategic network formation context with imperfectly link mediated positive externalities to connections and spatial link costs our results highlight that depending on the strength of the externalities emergent and efficient networks may share several structural properties nevertheless emergent networks are insufficiently dense and should be more structured around central agents

trust and social collateral this paper builds a theory of trust based on informal contract enforcement in social networks in our model network connections between individuals can be used as social collateral to secure informal borrowing we define network based trust as the largest amount one agent can borrow from another agent and derive a reduced form expression for this quantity which we then use in three applications 1 we predict that dense networks generate bonding social capital that allows transacting valuable assets whereas loose networks create bridging social capital that improves access to cheap favors such as information 2 for job recommendation networks we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates 3 using data from peru we show empirically that network based trust predicts informal borrowing and we structurally estimate and test our model

peer discipline and incentives within groups abstract we investigate how a collusive group can sustain non nash actions by enforcing internal discipline through costly peer punishment we give a simple and tractable characterization of schemes that minimize discipline costs while preserving incentive compatibility we apply the model to a public goods contribution problem we find that if the per capita benefit from the public good is low then regardless of whether peer discipline is feasible or not only small groups will contribute to the good if the public good benefit is significant but peer discipline is infeasible it remains the case that only small groups contribute on the other hand if the public good benefit is significant but peer discipline is feasible then full contribution takes place regardless of group size we reconcile this result with olson s idea that small groups are more effective by considering the case where the per capita benefit of the public good varies with group size

the common trend and transitory dynamics in real exchange rate fluctuations this study examines the behaviour of both common trend ct and transitory components of real exchange rate rer fluctuations under the current float the ct component is in most cases found to be sizeable albeit its relative importance can vary considerably across major currencies and its estimate can be sensitive to whether or not long run purchasing power parity ppp is imposed on the data further analysis suggests that both ct and transitory innovations are linked much more to interest rate changes than to productivity changes accordingly it is interest rate not productivity disturbances that drive the highly persistent rer

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

recruiting for ideas how firms exploit the prior inventions of new hires when firms recruit inventors they acquire not only the use of their skills but also enhanced access to their stock of ideas but do hiring firms actually increase their use of new recruits prior inventions our estimates suggest they do quite significantly in fact by approximately 219 on average however this does not necessarily reflect widespread learning by hiring in fact we estimate that a recruit s exploitation of her own prior ideas accounts for almost half of the above effect with much of the diffusion to others being limited to the recruit s immediate collaborative network furthermore although one might expect the recruit s role to diminish rapidly as her tacit knowledge diffuses across her new firm our estimates indicate that her importance is surprisingly persistent over time we base these findings on an empirical strategy that exploits the variation over time in hiring firms citations to the recruits premove patents specifically we employ a difference in differences approach to compare premove versus postmove citation rates for the recruits prior patents and corresponding matched pair control patents our methodology has three benefits compared to previous studies that also examine the link between labor mobility and knowledge flow 1 it does not suffer from the upward bias inherent in the conventional cross sectional comparison 2 it generates results that are robust to a more stringently matched control sample and 3 it enables a temporal examination of knowledge flow patterns this paper was accepted by kamalini ramdas entrepreneurship and innovation

symmetric research joint ventures cooperative substitutes and complements we introduce the concepts of cooperative substitutes and complements and use them to explain when all firms in a research joint venture will choose equal levels of r d we show that the second order conditions for a symmetric optimum take a particularly simple form ruling out both excessive cooperative substitutability and excessive cooperative complementarity and nesting conditions already derived in the literature finally we apply our results to the comparison between cooperative and non cooperative r d and show in an important special case that asymmetric outcomes are only optimal for a very limited range of parameter values

the migration of technical workers using panel data on the danish population we estimated the revealed preferences of scientists and engineers for the places in which they choose to work our results indicate that these technical workers exhibit substantial sensitivity to differences in wages but that they have even stronger preferences for living close to family and friends the magnitude of these preferences moreover suggests that the greater geographic mobility of scientists and engineers relative to the population as a whole stems from more pronounced variation across regions in the wages that they can expect these results remain robust to estimation on a sample of individuals who must select new places of work for reasons unrelated to their preferences those who had been employed at establishments that discontinued operations

the structure of competition how competition between one s rivals influences imitative market entry this paper investigates how the pattern of encounters between a firm s competitors affects the firm s inclination to follow its competitors into a new market we theorize that direct encounters between a firm s rivals lead to a herding effect making imitative market entry more likely past mutual forbearance between a firm s competitors resulting from asymmetric multimarket competition further strengthens this herding effect by enhancing the firm s expectations of market attractiveness in contrast aggressive past rivalry between the competitors resulting from symmetric multimarket contact dampens these expectations producing a competition effect that makes herding less probable we test our idea in two distinct contexts the chinese pharmaceutical industry and the taiwanese computer hardware industry and find consistent support in both settings we discuss how our analysis of what we call the structure of competition can be extended to research on other forms of firm behavior

commitment in utility regulation a model of reputation and policy applications abstract this paper builds a dynamic model of utility regulation where a government cannot commit to a time inconsistent policy of not expropriating investment by allowing the government s type to change over time i explore how reputation concerns may generate partial commitment restricting attention to equilibria that are strongly renegotiation proof i show that there is a unique perfect bayesian equilibrium this contains episodes of investment and good behaviour followed by periods of expropriation and non investment i then apply the model to consider how the power of the incentive scheme and decentralization may influence the properties of this equilibrium in the case of the power of incentives the model suggests that price caps may worsen commitment in developing countries but not in developed ones similarly the model suggests that decentralisation is likely to have a significant effect on commitment but that this effect will depend on the general ability of the government to commit overall we conclude that the effect of such policies on commitment will be different across countries depending on the institutional environment

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

dynamics of social trust and human capital in the learning process the case of the japan garment cluster in the period 1968 2005 abstract this paper examined the ways and the extent to which human capital and social trust are associated with the learning process of a manager in making operations decisions through experience to this end using a data set originally and purposively constructed by the author i investigated the development and transformation of the garment industry cluster region of kojima japan the major findings through statistical estimations are as follows 1 in the cluster development stage the social trust of an enterprise and its manager s experiences in firm operations could be regarded as forming a complementary association 2 in the stage following cluster development however a manager s human capital as accumulated through schooling and personal experience instead of social trust become complementary

general education versus vocational training evidence from an economy in transition abstract this paper examines the relative benefits of general education and vocational training during romania s transition to a market economy we examine a 1973 educational reform that shifted a large proportion of students from vocational training to general education using census and household survey data we analyze the effect of this policy with a regression discontinuity design we find that men affected by the policy are significantly less likely to work in manual or craft related occupations but have similar levels of labor market participation and earnings compared to their counterparts unaffected by the policy we conclude that differences in labor market returns between graduates of vocational and general schools are largely driven by selection

multimarket contact competition and pricing in banking abstract in this paper we assess the impact of multimarket contact of banks on their market power by means of a simultaneous equation model in which the divergence of price from marginal cost is a function of multimarket linkages the model is estimated using aggregate data from the italian regions for the years 1997 2009 our results show that multimarket contact is positively and significantly correlated to the market power index and is also connected to both home and non home market concentration the evidence is robust to changes in model specification and multimarket contact measures and supports the idea that firms which have a greater amount of contact are more likely to collude

on the formation of interaction networks in social coordination games there are many situations where two interacting individuals can benefit from coordinating their actions we examine the endogenous choice of partners in such social coordination games and the implications for resulting play we model the interaction pattern as a network where individuals periodically have the discretion to add or sever links to other players with such endogenous interaction patterns we see multiple stochastically stable states of play including some that involve play of equilibria in the coordination game that are neither efficient nor risk dominant thus the endogenous network structure not only has implications for the interaction pattern that emerges but it also has a significant impact on the play in the coordination game relative to what would arise if the same interaction network were exogenous

price discrimination or uniform pricing which colludes more abstract conventional wisdom attributes different economic outcomes of uniform pricing and price discrimination to the heterogeneity in market conditions or market participants such as differences in demand elasticity or production costs we offer a new explanation for the observed differences that relates to behavioral aspects rather than demand or supply side effects in particular in a symmetric bertrand duopoly laboratory experiment for which theory predicts no differences between the two pricing regimes we find that tacit price collusion is systematically higher under price discrimination than under uniform pricing

adjustment costs and the sequencing of trade liberalisation a common feature of trade agreements between countries is that the integration of markets proceeds in stages this paper examin es conceptually the role played by adjustment costs in determining the best way to structure an agreement between two countries when there are multiple sectors to be liberalised adjustment costs to liberalisatio n of industries might influence the timing of liberalisatio n with the analysis bearing similarity to why tariff reductions tend to be phased in over time when two industries have no spillover eff ects trade agreements with sequential liberalisation will be less costly to sustain however if the liberalisation of one in dustry influences permanently the flow of benefits from liberalising the other industry simultaneous liberalisation may be easier to sustain

collusion at the extensive margin abstract we augment the multi market collusion model of bernheim and whinston 1990 by allowing for firm entry into and exit from individual markets we show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement collusion at the extensive margin whereby firms collude by avoiding entry into each other s markets or territories we characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart specifically it is demonstrated that where duopoly competition is fierce collusion at the extensive margin is always sustainable finally we provide a theoretic foundation for the use of a proportional response enforcement mechanism

stochastic trends and economic fluctuations in a small open economy in this paper we describe how restricted vector autoregressions can be employed to examine the sources of macroeconomic fluctuations we show how cointegration restrictions can be used to identify a var system with common stochastic trends subject to transitory and permanent changes in average growth and how we may investigate the system s responses to permanent shocks i e to innovations to the trends theoretical cointegration vectors are derived from a small open economy growth model for terms of trade real gdp real consumption and real investments applying these methods to swedish annual data 1875 1986 we find that permanent real supply shocks account for most of the fluctuations in gdp even in the short run

the rejuvenation of inventors through corporate spinouts this article focuses on corporate spinouts as a strategy that can rejuvenate the inventive efforts of inventors with a long tenure in the same company we rely on an unbalanced panel of 5 604 inventor year observations to study a matched sample of 431 inventors employed by the xerox corporation and find evidence in support of three predictions first inventors who join a spinout increase the extent of exploration in their inventive activities second they decrease the extent to which they rely on the parent organization s knowledge third because long tenured employees through socialization tend to progressively adopt more exploitative behavior than short tenured members they benefit relatively more from the spinout experience these results are robust to several econometric specifications that try to account for the endogeneity of the inventors decision to join the spinout for the fact that spinouts inventive activity may be intrinsically different from that of the parent company and for the possible presence of novel external stimuli for those who join spinouts the data provide large sample evidence consistent with the idea that socialization reduces opportunities for organizational learning we discuss the implications for theory and practice

the role of relative performance in inter firm mobility of inventors abstract prior research has emphasized the influence of inter firm mobility on knowledge flows and innovation yet we have an incomplete picture of the antecedents of inventor mobility building on theoretical traditions related to decision making based on limited asymmetric bounded information and economic and other incentives our paper suggests that after controlling for individual performance and other variables previously shown to affect inter organizational mobility an inventor s performance relative to his co patenting group alters his likelihood of mobility our analysis of 2648 inventors in the pharmaceutical industry shows that for those performing above their reference group of past and current co inventors in patenting an increase in relative performance decreases the likelihood of mobility and for those performing below the reference group a decrease in relative performance decreases the likelihood of mobility we also find that when inventors have more external scientific collaborations their likelihood of mobility increases and this variable moderates the relationship between the performance gap and mobility but only for those performing above their peers