fiscal decentralisation the knowledge economy and school teachers wages in urban china abstractwe examine how fiscal decentralisation and progress towards the development of a knowledge intensive economy has affected teachers wages in china utilising panel data from 2001 to 2013 we find that fiscal decentralisation has a negative impact on teachers wages and that this effect is magnified through a deepening of the knowledge economy while the knowledge economy itself has no effect on teachers wages the findings suggest that incentives being offered to local administrators need to be revisited if china is convinced of the need to increase teacher quality in ways suited to the knowledge economy which it wishes to construct

male female urban income distributions in canada the service sector in a dependency model international trends of increasing income inequality have not occurred equally for male and female income distributions in canadian cities urban male income inequality declined from 1970 to 1980 it increased in the next decade but only to its 1990 level female income inequality has declined consistently these urban income distributions can be well explained using a dependency model in which the female income distribution is influenced by the male income distribution and the income gap between males and females this dependence effect is modified by urban characteristics male and female income distributions are more alike in larger cities and in cities with relatively higher female median incomes beginning in 1990 service sector employment contributes significantly to income inequality for both gender groups with a slightly greater effect for females

urban biased policies and rising income inequality in china since the start of economic reforms in 1978 china has experienced the largest increase in income inequality of all countries for which comparable data are available according to the world bank 1997 china s gini coefficient increased from 28 2 in 1981 to 38 8 in 1995 based on official survey data another study that used internationally standard definitions for incomes estimated china s gini ratio at 38 2 in 1988 and 45 2 in 1995 a level that already surpassed many developing economies in asia azizur khan and carl riskin 1998 are these income inequality changes the consequence of institutional reforms that replaced egalitarian rewards with work incentives employment contracts and labor mobility this paper uses household survey data collected by china s state statistical bureau ssb to investigate the sources and causes of this rising inequality by analyzing gini ratios and generalized entropy measures i decompose the overall inequality into three sectoral components i inequality within rural areas ii inequality within urban areas and iii sectoral disparity the data indicate that increases in rural urban income differentials have been the driving factor behind the rising overall inequality in china i argue that urbanbiased policies and institutions including labor mobility restrictions welfare systems and financial policies of inflation subsidies and investment credits to the urban sector are responsible for the long term rural urban divide and the recent increases in disparity

disruption costs learning by doing and technology adoption abstract we study technology adoption in a dynamic model of price competition adoption involves disruption costs and learning by doing because of disruption costs the adopting firm begins in a market disadvantage which may persist if its rival captures the customers that the adopting firm needs to learn the technology the prospect of future rents by the rival results in i a failure to adopt socially efficient technologies ii an equilibrium preference for technologies that are learned faster but have lower social value and iii more technologies being adopted if more firms enter the market

entry and competitive dynamics in the mobile telecommunications market abstract we propose an extension of the gans stern gans j s stern s 2003 the product market and the market for ideas commercialization strategies for technology entrepreneurs research policy 32 2 333 350 framework that includes entry by existing firms an incumbent firm possessing complementary assets and strong appropriability is in a formidable position teece d j 1986 profiting from technological innovation implications for integration collaboration licensing and public policy research policy 15 6 285 305 however a de alio entrant can leverage complementary assets to enter along a new technological trajectory and then develop appropriability we illustrate how several mobile telecommunications firms ericsson nokia and samsung pursued this strategy to catch up with the market leader motorola we also identify several shortcomings in motorola s approach it was too inward looking in developing technologies but ironically not inward looking enough in exploiting its most valuable patents

when do auctions ensure the welfare maximizing allocation of scarce inputs we determine when an unfettered auction will ensure the welfare maximizing allocation of a scarce input that enhances product quality and may reduce production costs a supplier values the input for this use value and for its foreclosure value because once the input is acquired it is unavailable to rivals an unfettered auction often ensures the welfare maximizing allocation of an input increment however it can fail to do so when the input would increase relatively rapidly the competitive position of a rival with a moderate competitive disadvantage bidder handicapping that ensures auctions generate welfare maximizing input allocations differ from standard handicapping policies

where does an industry locate abstract this paper presents an econometric model of industrial location and estimates the model for two industries in brazil based on a comprehensive data set the model predicts which cities will or will not have the industry and for these cities with the industry what the scale of operation will be the parameters estimated in a full information context represent the technology of production supply of entrepreneurs and equilibrating error in markets the results are strong and very suggestive and the explanatory power of the model is relatively high the results are used to simulate the impact of industry subsidies on locational patterns

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

the learning curve market dominance and predatory pricing sufficient conditions for id and iid are given in the case of two step learning in which a firm reaches the bottom of its learning curve after just two sales however examples are also constructed for the two step learning case in which neither id nor iid holds it is also shown that in equilibrium iid implies that learning is privately disadvantageous although it is socially advantageous finally introducing avoidable fixed costs and possible exit into the model yields a new theory of predatory pricing based on the learning curve hypothesis

choosing the competition and patent licensing this article examines licensing as a means of choosing the competitors which a patentee monopolist will face in the period after the patent expires the queue of entrants consists of two firms which differ in their relative strengths as competitors for example by size or level of marginal cost by structuring the industry to be composed of weak competitors the incumbent is able to prolong its dominant position in the industry after the patent expires examples are presented in which the evidence suggests that choosing the competition was an important motivation of the licensor s behavior

the relationship between income inequality and city size a general equilibrium model of an open system of cities approach a conclusion which emerges from studies of the factors affecting income inequality among cities is that many are connected through a number of different mechanisms with city size the explanations are derived from partial equilibrium models of the labour market and ignore considerations associated with labour mobility among cities to remedy this deficiency our paper employs a well developed general equilibrium model of an open system of cities to characterise the relationship between city size and income inequality that emerges an outstanding conclusion derived is that unlike existing explanations which provide justifications only for a unidirectional positive or negative rotation between city size and income inequality the general equilibrium model applies no restrictions on the direction of the relation additional restrictions are therefore needed to justify a positive or negative relation for instance if households with high income have relative preferences for non traded goods whose prices are

an equilibrium model of city size abstract this paper develops an equilibrium model of city size in which population distribution real prices and real wages are determined two possible modifications are considered one involving externalities the partial equilibrium changes resulting from these modifications are derived and seen to be quite different from the general equilibrium changes finally the paper suggests that site specific factors of production must be introduced into any consistent model of city size

dynamic inducements in r d investment market signals and network locations this research shows that alliance networks shape how firms respond to uncertainty reducing information generated outside a network product awards signal the potential commercial success of the awa

optimal sequential investment when capital is not readily reversible when investment opportunities arrive one at a time and are reviewed sequentially a corporation s optimal policy differs from a standard net present value rule if the corporation exercises control over an industry state variable and control is costly the first condition presupposes a degree of market power for the firm the second occurs if corporate investment decisions are imperfectly reversible to address the problem of optimal investment in this context a firm s investment decisions are modeled as a markov reward process the causes of economic irreversibility are discussed and general propositions concerning the optimal investment policy are derived these propositions are then applied to the optimization of an exploration program by an oligopolistic firm a price leader under particular demand and distributional assumptions solutions for the optimal decision rule and the value of the exploration program are obtained and their properties examined current investment may affect future opportunities by creating growth opportunities as defined by myers 16 see also spence 25 or by reducing the value of an existing opportunity set despite the known potential for these interactions capital budgeting techniques such as net present valuation scenario planning and monte carlo simulation focus exclusively on the stand alone value of an investment the capacity for modeling interactions is present in the multiperiod models of merton 16 bogue and roll 5 and others the absence of applications however is evidence that actual economic interactions between current and future opportunities are not well understood this paper develops a model of a firm facing a sequence of interdependent growth opportunities opportunities have positive net present values because the firm exercises market power in its product market current investment changes the value of future opportunities through its effect on a product market variable the model is used to examine the impact of demand industry structure and technology on optimal investment rules and on the value of aggregate growth

the international effects of china s growth trade and education booms china s international trade flows have increased by 500 since 1992 far outstripping gdp growth likewise tertiary education enrollments have increased by 300 we simulate these changes using a multi sector growth model of the chinese and usa economies a decade of trade biased growth in china is found to have a large effect on the usa economy raising gdp approximately 3 4 5 percentage points we also show that the trade bias in china s growth accounts for more than half of the observed growth in tertiary enrolments in china in contrast neutral growth has practically no effect on usa incomes or china s stock of skilled labour finally the simulations reveal that china s education boom per se has practically no long run impact on the usa economy the results thus indicate that the pattern of productivity growth in exports sectors as might be caused by falling trade costs has been critical in transmitting benefits of chinese growth to the world economy they also point to an important link between falling trade costs and human capital formation

persistence of innovation in dutch manufacturing is it spurious this paper studies the persistence of innovation and the dynamics of innovation output in dutch manufacturing using firm data from three waves of the community innovation surveys cis pertaining to the periods 1994 1996 1996 1998 and 1998 2000 we estimate by maximum likelihood a dynamic panel data type 2 tobit model accounting for individual effects and handling the initial conditions problem we find that there is no evidence of true persistence in achieving technological product or process innovations while past shares of innovative sales condition albeit to a small extent current shares of innovative sales

the impact of public transport on us metropolitan wage inequality this article presents a wage inequality analysis for 158 large us metropolitan statistical areas msas the analysis is concerned with whether public transport has a detectable influence on 1990 levels of wage equality because public transport systems are generally designed to link residences with employment locations higher levels of service provision all other factors being equal should be associated with higher employment rates and more uniform distributions of earnings few analyses however have attempted to evaluate public policies that affect wage distributions the results of this research provide a macroscopic view of the effectiveness of urban transport investments with respect to urban wage inequality

a stop too far how does public transportation concentration influence neighbourhood median household income research on us cities has connected the concentration of public transit with various neighbourhood outcomes but it remains unclear whether public transit was more attractive to lower or higher income households some research found neighbourhoods with public transportation were more attractive to lower income households likely because such households could not afford private transportation closer examination suggested that the type of transit was important as lower income households were more likely to use buses while higher income households were more likely to use rapid transit a key limitation of existing research on transit and neighbourhood household income was that it did not adequately control for variation over time the current study addresses this limitation by assessing how the concentration of subway and bus stops predicted variation in median household income in new york city during the 2000s results of cross sectional regressions partially confirm the findings of previous research that

invention and innovation under alternative market structures the case of natural resources this paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress the structures considered are a planned economy pure monopoly and competition with patent rights in an efficient allocation the date of invention coincides with the date of innovation the date at which technology is used this is also true with a pure monopoly but monopoly retards technical progress relative to the efficient level competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large also competition may lead to sleeping patents where invention strictly precedes the date of innovation

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

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

strategic learning and entry equilibrium abstract this paper describes the nature of equilibrium for a dynamic game between a monopolist and an entrant who adopts a learning strategy for cost reduction the learning process is characterized as a continuous time poisson process where each success reduces a part of the entrant s cost difference with the incumbent the entrant chooses a stream of expenditure after every success to control the instant probability of the next success the techniques of semi markov decision processes are used to characterize equilibrium learning decisions at every stage distribution of entry times and the effects of subsidies technical progress etc on pre entry and post entry learning strategies

the effect of city size on the urban income distribution through time 1950 70 in the literature on the urban income distribution two important questions have been ignored first is the question of the appropriateness of hypotheses testing on samples of smsas with broad ranges of populations sizes the second question is the stability of the effects of city size and other determinants on the urban income distribution through time this stability is crucial to the propriety of drawing policy implications from previous studies which have employed data from only a single point in time this study finds that hypotheses tests are sensitive to the size classes of cities being examined and hence the results of hypotheses tested for smsas with broad ranges of population may be misleading the present analysis also reveals that significant structural changes have taken place in the standard linear model over time and therefore inferences regarding the future from past studies should be viewed with caution

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

male female income distributions city size and urban characteristics canada 1970 1980 the separate effects of city size on male and female income distributions are analyzed using canadian data for the period 1970 1980 the results indicate that cities with greater male income equality do not necessarily exhibit greater female equality further the variables which contribute to equality for males are different from those for females excerpt

economic analysis and the quest for competitive advantage curred in the past decade between applied microeconomists and those who study business strategy business strategists have cast up a series of questions for industrial economists who have responded with numerous applications of economic theory and quantitative research methods this interchange has been fruitful and indeed more fruit remains for the picking i shall argue for centering the collaborative effort on what may be called committed competition rivalrous moves among incumbent producers that involve resource commitments that are irrevocable for nontrivial periods of time most concerns of business strategy are with policy choices that

investment decisions with economies of scale and learning economists in an antitrust case have at their disposal quite a large bag of tools and truisms but for the most part these are derived from studies of static models in many industries the policy issues concern the implications of firm behavior on market structure and performance over time a case in point is a recent federal trade commission complaint against the dupont corporation the ftc alleged that dupont had engaged in a strategy designed to monopolize the market for titanium dioxide better known as the coloring agent in white paint the alleged strategy was in essence what some would recognize as the boston consulting group story when a firm has a lead in an industry with significant learning economies the firm should price below competitors costs and expand to take further advantage of learning effects and in the process to increase market share this paper summarizes the results of an analysis of dynamic competition with scale and learning effects the research is a preliminary exploration all results are obtained under rather special assumptions about the production technology the effects of experience on costs and the strategic interactions between firms two kinds of strategic behavior are considered in the first case each firm takes the production decisions of competitors as given the nash assumption in the second case firms consider pre emptive capacity investments taking into account that competitors will alter their future investment plans to achieve nonnegative profits we call this a competitive stackelberg cs game using the maximization of net surplus as a socially optimal benchmark neither form of competition yields an efficient outcome when new investment exhibits increasing returns to scale in the absence of learning effects smaller firms in a nash competition have a greater incentive to add new capacity than do larger firms and the equilibrium industry structure approaches equal market shares introducing learning effects in the nash game causes a tendency toward increased concentration but monopoly is not an inevitable consequence the cs game is more competitive than the nash game in the sense that firms compete for the right to invest at each instant of time with identical firms and no learning effects the market structure in a cs equilibrium is indeterminate although the sequence of industry investments is well defined introducing firm specific and nonstochastic learning has a dramatic effect on the cs equilibrium all new investment is undertaken by a single firm even if the learning economies are small moreover the level of output could be lower and price higher in a cs equilibrium than it would be in a nash equilibrium in this sense more competition can lead to a lower rate of output over time

the higher educational transformation of china and its global implications this chapter documents the major transformation of higher education that has been underway in china since 1999 and evaluates its potential global impacts this has involved major new resource commitments to tertiary education and significant changes in organizational form reflecting china s commitment to continued high growth through quality upgrading and the production of ideas and intellectual property as set out in both the tenth 2001 2005 and eleventh 2006 2010 five year plans the number of undergraduate and graduate students in china has been growing at approximately 20 per year since 1999 and the total number of graduates at all levels of higher education in china has increased by more than a factor of six in the last decade entering class sizes and total student enrolments have risen fast too approximately quintupling prior to 1999 increases in these areas were much smaller much of the increased spending is focussed on elite universities and new academic contracts differ sharply from earlier ones which lacked tenure and often used annual publication quotas

the kuznets curve and the great u turn income inequality in u s counties 1970 to 1990 the authors examine the determinants of inequality in the distribution of family income in approximately 3 100 counties of the united states in 1970 1980 and 1990 such a study provides a window on global trends in social inequality during the period which spans the tail end of the kuznets curve and the more recent upswing in income inequality results from random effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the kuznetsian pattern of declining inequality with economic development a positive effect of urbanization on inequality a declining positive impact of sector dualism an increasing positive effect of educational heterogeneity and a persistent effect of racial dualism several variables associated with the recent upswing in inequality have significant effects female labor force participation negative female headed households positive percent of the population over age 65 changes from positive to negative over the period manufacturing employment negative and unemployment ambiguous they also discuss methods of estimating the gini coefficient for income inequality at the county level and measures of sector farm nonfarm dualism racial black white dualism and educational heterogeneity

and the winner is acquired entrepreneurship as a contest yielding radical innovations new entrants to a market tend to be superior to incumbents in originating radical innovations we provide a new explanation for this phenomenon based on markets for technology it applies in industries where successful entrepreneurial firms or their technologies are acquired by incumbents that then commercialize the innovation to this end we analyze an innovation game between one incumbent and a large number of entrants in the first stage firms compete to develop innovations of high quality they do so by choosing at equal cost the success probability of their rd the bigger the number of entrants the more radical the most radical project generally entrants tend to choose more radical r d approaches and generate the highest value innovation in case of success we illustrate our theoretical findings by a qualitative empirical study of the electronic design automation industry and derive implications for research and management

labor migration and returns to rural education in china this paper provides an answer to the following question why do empirical studies find low returns to schooling in rural china and yet the schooling rates are high i find that schooling played a significant role in raising the accessibility of urban formal employment to rural people in the late 1970s and early 1980s in the face of the government s restrictive policy on labor migration from rural to urban areas the large urban rural income difference provided a strong incentive for senior high school education the theory also explains the drop in the senior high school attendance in the mid 1980s

lumpy investment in a growing differentiated market optimum consider now a growing differentiated market that is a market for a chamberlinian group of differentiated commodities which is expanding over time as the size of the market increases it will be profitable for new firms to enter with new varieties of the industry product the same strategic considerations apply as with a homogeneous industry investment in new products involves irreversible and indivisible costs thus decisions of a potential entrant depend on the past decisions of earlier entrants and on the decisions of future entrants as to entry date price and type of product produced in this way the equilibria that we consider here differ from nash equilibria in static models in that the profit flows accruing to incumbent firms depend on the behaviour of future entrants one consequence of this for example is that the nash equilibrium we consider here involves pure profit for all producing firms when a reasonably large number of products is established in the market the industry can be regarded as monopolistically competitive it is appropriate then to pose in this context traditional questions concerning the welfare optimality of monopolistic competition will there be too much variety with each product produced inefficiently the dynamic aspect of the problem means that it is perfectly possible in principle to have excessive variety at one stage in the growth of a market and insufficient variety at some different stage note that one relevant decision variable is the introduction date of a new product or of a whole sequence of products provided that variable costs can be covered a particular product once introduced will not leave the set at a later date thus if we take any given chronological sequence of product types and

analyzing literature based innovation output indicators the italian experience abstract this paper presents the results of a study on the product innovations introduced in the italian market in 1989 and reported in a selected number of trade journals the analysis of data collected by means of this literature based counting procedure confirms that r d oriented industries and large firms do not in italy have a marked competitive advantage in innovation the country appears to be instead characterized by a significant presence of consumer goods industries and small firms in innovation our data indicate a statistically significant association between trade competitiveness and strength in product innovation and show the comparatively higher capacity for product innovation of some of the industries in which italy achieves a positive performance in international trade moreover the presence of spillovers at the regional level from both private and public r d expenditures proves to be positively correlated with the development of product innovations finally small firms with fewer than 50 employees appear to be more innovative than is usually believed to be the case

a numerical simulation analysis of hukou labour mobility restrictions in china abstract we use numerical simulation methods to analyze the hukou system of permanent registration in china which many believe has supported growing relative inequality over the last 20 years by restraining labour migration both between the countryside and urban areas and between regions and cities our aim is to inject economic modelling into the debate on sources of inequality in china which thus far has been largely statistical we first use a model with homogeneous labour in which wage inequality across various geographical divides in china is supported solely by quantity based migration restrictions urban rural areas rich poor regions eastern central and western non coastal zones eastern and central western development zones eastern central western zones more disaggregated 6 regional classifications and an all 31 provincial classification we calibrate this model to base case data and when we remove migration restrictions all wage and most income inequality disappears results from this model structure points to a significant role for hukou restrictions in supporting inequality in china we then present a further model extension in which urban house price rises retard rural urban migration the impacts of removing hukou restrictions on migration are smaller but are still significant finally we modify the model to capture labour productivity differences across regions calibrating the modified model to estimates of both national and regional gini coefficients removal of migration barriers is again inequality improving but less so