public research and industrial innovations in germany this paper deals with the effects of publicly funded research at universities polytechnics and federal research labs on industrial innovations in germany we discuss the characteristics of companies that benefit from the findings of public research institutions in questioning 2 300 companies we found that less than one tenth of product or process innovating firms introduced innovations between 1993 and 1995 that would not have been developed without public research these new products amount to approximately 5 percent of all new product sales regressions show that firms own r d support the ability to absorb the findings of public research and turn them into innovations contrary to the widely held opinion that proximity to public research institutions does promote collaboration between firms and public research and increase the amount of received knowledge spillovers we found no higher probability of publicly supported innovations for firms in germany that are located near universities or polytechnics

barriers to trade and the import vulnerability of us manufacturing industries while it is widely recognized that imports can discipline markets the strength of that disciplinary power surely varies across industries the determinants and extent of this interindustry variation in the disciplinary force for foreign trade flows is however relatively unexplored this article investigates the microeconomic determinants of changing import shares at the industry level for u s manufacturing industries based upon this investigation the authors are able to create an index that measures the relative vulnerability of the various manufacturing industries to foreign competition and test a number of hypotheses concerning the underlying causes of observed variations in import vulnerability copyright 1990 by blackwell publishing ltd

licensing of university inventions the role of a technology transfer office abstract we develop a theoretical model to explain the specific role of technology transfer offices ttos in licensing university inventions using a framework where firms have incomplete information on the quality of inventions we develop a reputation argument for the tto to reduce the asymmetric information problem our results indicate that a tto is often able to benefit from its capacity to pool innovations across research units and to build a reputation within universities we identify when the technology seller will have an incentive to shelve some of the projects thus raising the buyer s beliefs on expected quality this results in fewer but more valuable innovations being sold at higher prices we explain the importance of a critical size for the tto to be successful as well as the stylized fact that ttos may lead to fewer licensing agreements but higher income from innovation transfers

the allocation and effectiveness of china s r d subsidies evidence from listed firms abstract in this study we investigate the allocation of china s r d subsidies and their effectiveness in stimulating business r d investments for the population of chinese listed firms between 2001 and 2006 with respect to subsidy allocation we find that firm selection is mainly determined by prior grants high quality inventions and minority state ownership market oriented provincial governments distribute grants less frequently and firms located in developed provinces receive grants more often considering effectiveness r d subsidies instantaneously crowd out business r d investment but are neutral in later periods in 2006 one public rmb reduces business r d investments by half an rmb however crowding out is not prevalent for repeated recipients of r d subsidies high tech firms and minority state owned firms

academic research underlying industrial innovations there has been no systematic study of the characteristics of the universities and academic researchers that seem to have contributed most to industrial innovation nor do we know how such academic research has been funded this paper based on data obtained from sixty six firms in seven major manufacturing industries and from over two hundred academic researchers sheds new light on the sources characteristics and financing of academic research underlying industrial innovation the findings should be of interest to economists concerned with technological change and to policymakers attempting to increase the economic payoff from the nation s academic research copyright 1995 by mit press

diversifying entry some ex ante explanations for postentry survival and growth links between theoretically determined preentry conditions and the postentry performance of diversifying entries made by large industrial firms are examined industry firm and relatedness variabl

towards a testable model of entry a study of the us manufacturing industries this paper develops a simple model of firms entry decisions fits it to interindustry data and tests hypotheses related to contestability theory it is shown that entry increases with the profit level of incumbents holding fixed the expected losses that the entrant would suffer in the event of exit these expected losses are greater the higher the probability of a predatory incumbent response and the larger the sunk costs that must be committed by the entrant the effects of sunk costs are significant and incumbents are significantly more likely to react aggressively when they are both profitable and concentrated copyright 1990 by the london school of economics and political science

global and domestic utilization of industrial relevant science patent citation analysis of science technology interactions and knowledge flows abstract the development of science based technologies may draw heavily on codified and tacit outputs from both domestic research bases and foreign sources having a view of the scientific underpinnings of these technical innovations and related knowledge diffusion and utilization processes especially those concerning public financed basic research is of major importance to policymakers nowadays some of those scientific and technical inputs are pivotal to technical inventions and are acknowledged as such by explicit references citations to related research papers in the reference list on the corresponding patents this case study deals with citations to dutch authored research papers on uspto patents granted during the period 1987 1996 results of the citation analysis reveal several important features of contributions made by the dutch science base to dutch invented and or foreign invented patents such as 1 a marked overall increase of patent citations to dutch research papers and 2 significant differences between domestic and foreign citation patterns where 3 domestic citation links are dominated by author inventor self citations and patents originating from the large r d intensive multinational firms such as philips these findings provide new empirical evidence that patent citation analysis produces systemic quantitative data providing strategic background information regarding nation specific and sector specific factors in domestic and cross border science technology linkages and knowledge flows

determinants of entry and exit an application of the compounded bivariate poisson distribution to u s industries 1972 1977 numerous empirical studies have applied a variety of approaches and data to examine the market entry of firms across industries one branch of studies which is the focus of the present paper uses industry level census data to examine the role of industry characteristics as entry barriers this research features estimation results from very large samples that cover a wide range of industries examples include mcguckin 19 orr 20 gorecki 9 10 duetsch 6 7 kessides 14 and chappell kimenyi and mayer 5 henceforth referred to as chappell et al 5 the above studies use net entry e g the number of firms in 1977 minus the number of firms in 1972 as a measure of the number of new entrants in a given industry with the exception of chappell et al classical regression models of net entry have been the tool of analysis chappell et al point out that because net entry data are integer valued and thus deviate from classical regression assumptions the statistical specification of net entry calls for a discrete probability distribution chappell et al base estimation on a univariate poisson distribution in the present paper we consider another aspect of the data and improve upon the approach of chappell et al observations on net entry actually reflect the difference between unobservable entry and exit flows and as such contain information on both entry and exit while this point is well understood the focus of net entry studies has been entry and the approach has been to model the data as a function of entry alone unfortunately the failure to incorporate the true informational content of the data into the estimation clouds the results in particular neglecting the dependence of the data on exits can produce misleading estimates of the entry parameters small values of net entry for example might merely reflect a balancing of strong entry and exit flows

the relationships between science technologies and their industrial exploitation an illustration through the myths and realities of the so called european paradox abstract this paper discusses first the properties of scientific and technological knowledge and the institutions supporting its generation and its economic applications the evidence supports the broad interpretation that we call the stanford yale sussex synthesis second such patterns yield important implications with respect to the so called european paradox i e the conjecture that eu countries play a leading global role in terms of top level scientific output but lag behind in the ability of converting this strength into wealth generating innovations some descriptive evidence shows that contrary to the paradox conjecture europe s weaknesses reside both in its system of scientific research and in a relatively weak industry the final part of the paper identifies a few normative implications much less emphasis should be put on various types of networking and much more on policy measures aimed at strengthening both frontier research and european corporate actors

advertising sunk costs and barriers to entry this paper tests hypotheses about the entry deterring effects of advertising the model isolates three separate effects of advertising on entry the effect on the irrecoverable costs of entry the effect on the uncertainty underlying the entry environment and the effect on the measured rates of profit we find that advertising impedes entry since necessary advertising expenditures give rise to a sunk cost which raises the risk of entry however we also find a countervailing force due to advertising in that the entrant perceives a greater likelihood of success in markets where advertising is important our analysis shows that the overall impact of advertising on entry is positive

the effects of federal research and development subsidies on firm commercialization behavior abstract this paper assesses the longer term up to 14 years causal impact of federal research and development r d subsidies on firms commercialization behavior the data are for small firms which applied to the 1998 2000 advanced technology program atp competitions a variant of the research design pioneered by heckman 1979 allows for selection bias to be controlled for commercialization behavior is operationalized as the number of new product announcements related to the technology a firm mentions in its atp proposal s the major finding is that receiving an atp award has a positive and significant causal impact on a firm s commercialization behavior

accounting for net entry into greek manufacturing by establishments of varying size adopting the view that size matters in understanding entry exit patterns this research explores the nature and causes of net entry patterns of various size defined groups of establishments in the case of a less industrialised country greece the hypothesis to be tested is that the determinants of entry are not independent of firm size throughout this paper the analysis has had to confront difficulties arising from the use of net entry rates defined at the size class level the degree of size disaggregation used in this paper is considerably finer than used before five employment defined size classes have been used instead of sliding cut off points discriminating between small and large firms unlike other research using pooled models to explain variation in entry exit rates across industries the data used here are characterised by the absence of significant industry specific systematic variation overall the results obtained in this paper indicate that there is a gradation in the responses of different size classes to stimuli defined at the industry level evidence is offered that small firms are different in that they manage to overcome entry barriers perhaps adopting different survival strategies and that large firms are well aware of market conditions and are in an advantageous position to overcome many of the problems imposed by entry barriers size classes in the middle of the size class distribution offer a rather mixed result due to size related advantages and disadvantages

unobservable industry characteristics and the innovation concentration advertising maze evidence from an econometric study using panel data for manufacturing industries in the frg 1979 1986 in discussing the nexus between innovations and market structure it is often argued that industry characteristics called opportunities might play an important role as determinants of innovation and that simultaneity rather than one way causality prevails we consider a three equation model for innovation advertising and concentration based on pooled cross section time series data for 26 german manufacturing industries we estimate single equation models with and without fixed industry and or time effects to control for unobservable industry or time effects respectively and simultaneous equation systems including fixed effects and controlling for extreme cases outliers or not furthermore we use two different measures for innovations i e the percentage of shipments due to new products and the percentage of firms which classified themselves as innovators our results can be summarized as follows 1 the firm size has no significant effect on innovation one can therefore not conclude from this data set that large firms are more innovative than small ones 2 unobservable industry effects do matter 3 the treatment of outliers does matter 4 simultaneity does matter 5 the way innovations are measured does matter 6 different stories could be told based on the results of the systems of interdependent equations estimated

fishing upstream firm innovation strategy and university research alliances this paper examines how innovation strategy influences firms level of involvement with university based research our results suggest that firms with internal r d strategies more heavily weighted toward exploratory activities allocate a greater share of their r d resources to exploratory university research and develop deeper multifaceted relationships with their university research partners in addition firms with more centralized internal r d organizations spend a greater share of their r d dollars on exploratory research conducted at universities in contrast to other external partners we find evidence suggesting that universities are preferred when the firm perceives potential conflicts over intellectual property 2007 elsevier b v all rights reserved

a comparative analysis of intertemporal behavior of profits japan and the united states this paper first asks whether the working of market forces in japanese manufacturing industries is unique to them or similar to u s counterparts it is found that autoregressive profit equations for 376 japanese firms over 1964 82 are on average similar to those for 413 u s firms over 1964 80 the paper next asks whether the interindustry pattern of profit adjustments in japan is related to industry traits in a manner analogous to the united states in this case specific national differences between the two countries in the effects of imports industry growth and capital intensity on the profit adjustment process are found copyright 1989 by blackwell publishing ltd

assessing spillovers from universities to firms evidence from french firm level data we assess the importance of information flows from universities to innovative firms and determine the relative contribution of formal collaboration and pure knowledge spillovers in this process we find that spillovers provide the most benefit to firms that imitate existing technologies or those that are involved in incremental innovation on the other hand highly innovative firms appear to derive most benefit from collaborative research with foreign universities indeed highly innovative firms are at the frontier of the academic knowledge in their industry therefore they only marginally benefit from aggregate or industry wide spillovers they require new forms of academic knowledge that they acquire through formal cooperation with foreign universities

do financial constraints hold back innovation and growth evidence on the role of public policy abstract this paper provides evidence that capital market imperfections hold back innovation and growth and that public policy can complement capital markets we deliver the evidence by studying the effects of government funding on the behavior of smes in finland by adapting the methodology recently proposed by rajan and zingales rajan r g zingales l 1998 financial dependence and growth american economic review 88 pp 559 587 to firm level data we show that government funding disproportionately helps firms from industries that are dependent on external finance we demonstrate that the result is economically significant and robust to a variety of tests

contracting with endogenous entry we analyze entry in markets where a principal contracts with a privately informed agent before learning his production cost the agent knows his probability of having a low cost his ex ante type and decides whether to pay an entry fee to contract with the principal there are two cut off equilibria that determine the possible types of an agent who actually enters the market and neither equilibrium can be discarded by standard selection criteria contrasting with standard intuition in the equilibrium with the highest cut off an increase in the entry fee reduces the marginal type of the agent who enters thus increasing entry and the expected cost of an entrant this equilibrium is selected by a criterion based on robustness to equilibrium risk even though the equilibrium with the lowest cut off is pareto dominant for the agent public policies that increase entry barriers may be welfare improving

the outputs of retail activities concepts measurement and evidence from u s census data the authors develop a new economic framework for the empirical analysis of retail margins this framework formalizes the role of distribution services as outputs of retail activities their main results are the following the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture oligopolistic features of market structure play a limited or no role in determining retail margins quantity setting and price setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 49 retail sectors from the 1982 u s census of retail trades copyright 1993 by mit press

r d and subsidies at the firm level an application of parametric and semi parametric two step selection models this paper analyzes the effects of public r d subsidies on r d expenditure in the german manufacturing sector the focus is on the question whether public r d funding stimulates or crowds out private investment cross sectional data at the firm level is used by apllying parametric and semiparametric selection models it turns out that public funding increases firms r d expenditure altough the magnitude of the treatment effect depends on the assumpions imposed by the particular selection model

the economic impacts of academic spin off companies and their implications for public policy abstract the importance of academic research ar to economic growth is widely accepted but quantification of incremental impacts and their attribution to any one country s expenditures is difficult yet quantitative justification of government ar funding is highly desirable we therefore attempt to quantify one impact which can be directly and causally attributed to one country s funding spin off companies we focus on ar in the non medical natural sciences and engineering nsexm in a whole country canada applied disciplines are sometimes assumed to be the most commercializable so we also separately investigate an especially basic science physics using a novel methodology we estimate the lifetime impacts of companies spun off directly from ar performed in 1960 1998 and compare the impacts with all government funding direct and indirect over the same period this picks up virtually all funding and most company formation since wwii up to 1998 such long term studies are rare but essential since we show that successful spin offs grow often exponentially over several decades with very conservative assumptions and allowing for the time value of money the impacts exceed government funding by a substantial margin physics actually fares 30 60 better than the combined nsexm this reflects more successful companies rather than greater numbers and therefore does not seem inconsistent with earlier studies on company numbers firm lifetimes are long with canadian impacts truncated primarily by some foreign acquisitions we argue that the spin off impacts represent incremental contributions to gdp much larger even on a time discounted basis than the government funding and directly attributable to it governments will also receive more in additional tax than they spent the impacts therefore provide a quantitative justification for the public investment allowing the much more important but less quantifiable long term benefits to be regarded as a free bonus the very good showing of physics also suggests that reduced emphasis on basic work or on the basic disciplines could actually weaken the commercialization of ar

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

the inevitable limits of eu r d funding abstract the experience of the past 40 years in national policies for and european cooperation in science and technology points to clear conclusions about eu policies first the prevailing notions of technology gaps between europe and japan and the usa notions which have been a driving force in the eu policy for research and technology have been exaggerated however real gaps exist amongst the eu member countries themselves secondly it is unrealistic to expect eu funded r d programmes by themselves to make a substantial difference to the rate and direction of technical change in europe however eu policies for competition and other forms of regulation trade and investment can have a major influence on corporate decisions about technical change it is important for eu innovation policy to promote favourable framework conditions within which business firms are encouraged to improve their technological and related organisational practices

profit entry and changes in concentration abstract the simultaneity between profit entry and changes in concentration is examined the sample includes 481 observations on 4 digit industries over the years 1972 1977 and 1977 1982 results show that profits respond positively to entry barriers and initial concentration net entry responds positively to initial profits and responds negatively to entry barriers concentration moves toward its steady state level but the rate of adjustment is very slow the competitive process left on its own does not seem to move quickly toward equilibrium

firing the wrong workers financing constraints and labor misallocation abstract firms consider wages current and expected productivity as well as firing and hiring costs when firing a worker financing constraints distort this intertemporal trade off leading firms to sub optimally fire short tenured workers with high future expected productivity we provide empirical evidence of this distortion using matched employer employee data from the swedish population between 2000 and 2010 we propose a new empirical strategy that uses credit ratings to identify financing constraints and uses exchange rates and trade data to identify demand shocks our empirical results identify an important new misallocation effect of financial frictions that operates within firms across different types of workers

inventor moral hazard in university licensing the role of contracts abstract we examine commonly observed forms of payment such as milestones royalties or consulting contracts as ways of engaging inventors in the development of licensed inventions our theoretical model shows that when milestones are feasible royalties are not optimal unless the licensing firm is risk averse the model also predicts the use of consulting contracts which improve the firm s ability to monitor inventor effort because these contracts increase the firm s expected profits the upfront fee that the university can charge is higher than otherwise these results therefore support the commonly observed university policy of allowing faculty to consult with licensing firms outside of their university contracts they also support firm policies of including milestones an empirical analysis based on a survey of 112 businesses that license in university inventions supports the complementarity of milestones and consulting suggested by the theory

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

globalisation of knowledge production and regional innovation policy supporting specialized hubs in the bangalore software industry abstract this paper is concerned with the changing role of regional innovation systems and regional policies in supporting the transition of indigenous firms in developing countries from competing on low costs towards becoming knowledge providers in global value chains special attention is paid to policies supporting the emergence and development of the regional innovation system in this transition process regional innovation systems in developing countries have very recently started to be conceptualised as specialized hubs in global innovation and production networks asheim b coenen l vang lauridsen j 2007 face to face buzz and knowledge bases socio spatial implications for learning innovation and innovation policy environment and planning c government and policy 25 5 655 670 chaminade c vang j 2006a innovation policy for small and medium size smes in asia an innovation systems perspective in yeung h ed handbook of research on asian business edward elgar cheltenham maggi c 2007 the salmon farming and processing cluster in southern chile in pietrobello c rabellotti r eds upgrading and governance in clusters and value chains in latin america harvard university press a specialized hub refers to a node in a global value chain that mainly undertakes one or a few of the activities required for the production and development of a given good or service or serves a particular segment of the global market in global value chains firms in developing countries have traditionally been responsible for the lowest added value activities however a few emerging regional innovation systems in developing countries are beginning to challenge this scenario by rapidly upgrading in the value chain there is however still only a poorly developed understanding of how the system of innovation emerges and evolves to support this transition process and what the role of regional innovation policy is in building the regional conditions that support indigenous small and medium size enterprises smes in this transition process this paper aims at reducing this omission by analyzing the co evolution of the strategies of indigenous smes and the regional innovation system of bangalore india

evaluating the impact of r d tax credits on innovation a microeconometric study on canadian firms this study examines the effect of r d tax credits on innovation activities of canadian manufacturing firms over the 1997 1999 period the federal and provincial r d tax credit programs were used by more than one third of all manufacturing firms and by close to two thirds of firms in high technology sectors we investigate the average effect of r d tax credits on a series of innovation indicators such as number of new products sales with new products originality of innovation etc using a non parametric matching approach compared to a hypothetical situation in the absence of r d tax credits recipients of tax credits show significantly better scores on most but not all performance indicators we therefore conclude that tax credits increase the r d engagement at the firm level and that the r d activities induced by fiscal incentives lead to additional innovation output

the changing rewards to science the case of biotechnology little is known about the form and or magnitude of compensation provided university based scientists working on firm r d this is unfortunate given the important role that university based scientists play in r d and the growing literature concerning compensation and innovation this paper sheds some light on these issues by examining the compensation of university based scientists involved with 52 biotech firms that made an initial public offering between march of 1990 and november of 1992 although the stock holdings of the university scientists are of particular interest additional forms of compensation received by the scientists are also examined

the macroeconomics of labor and credit market imperfections labour market frictions are not the only possible source of high unemployment credit market imperfections driven by microeconomic frictions and influenced by macroeconomic factors could also be to blame to develop this idea in a simple and tractable macroeconomic model we treat credit and labour market imperfections in a symmetrical way accordingly we introduce specificity in credit relationships and assume that credit to potential entrepreneurs is rationed due to endogenous search frictions in the spirit of diamond 1990 these imperfections mirror job search frictions in the labour market we study the determination of equilibrium unemployment in the presence of credit market frictions both with exogenous and endogenous wages we explore a number of possible extensions endogenous destruction monetary policy and the short run effects of financial liberalization

macroeconomic dynamics in a model of goods labor and credit market frictions building a model with three imperfect markets goods labor and credit representing a product s life cyle we find that goods market frictions drastically change the qualitative and quantitative dynamics of labor market variables the calibrated model leads to a significant reduction in the gap with the data both in terms of persistence and volatility while search models of the labor market fail in one of the two dimensions two factors related to goods market frictions generate these results i the expected dynamics of consumers search for goods itself depending on the income redistributed by firms and the entry of new products and ii the expected dynamics of prices which alter future profit flows

academic spin off s transfer speed analyzing the time from leaving university to venture for academic spin offs i analyze the length of time between the founder s leaving of academia and the establishment of his firm technology transfer can take place even years after leaving the mother institution a duration analysis reveals that a longer time lag is caused by the necessity of assembling complementary skills either by acquisition by a single founder or by searching for suitable team members furthermore new ventures are established earlier if the intensity of technology transfer is high the founders have access to university infrastructure or received informal support by former colleagues

trust and the market for technology abstract conditional on the decision to enter the market for immature technology we test for the effects that trust proxied by the context in which the negotiating parties first met has on the likelihood that these negotiations are successful using survey responses from 860 university firm and firm firm technology transactions we find that trust matters parties with high levels of trust i e know each other from a previous business are between 6 and 23 per cent more likely to conclude a transaction compared with those with low levels of trust i e cold callers we also find that patents can effectively substitute for a lack of trust and that trust is more important in upstream stages basic or applied science

the employment effects of credit market disruptions firm level evidence from the 2008 9 financial crisis this article investigates the effect of bank lending frictions on employment outcomes i construct a new data set that combines information on banking relationships and employment at 2 000 nonfinancial firms during the 2008 9 crisis the article first verifies empirically the importance of banking relationships which imply a cost to borrowers who switch lenders i then use the dispersion in lender health following the lehman crisis as a source of exogenous variation in the availability of credit to borrowers i find that credit matters firms that had precrisis relationships with less healthy lenders had a lower likelihood of obtaining a loan following the lehman bankruptcy paid a higher interest rate if they did borrow and reduced employment by more compared to precrisis clients of healthier lenders consistent with frictions deriving from asymmetric information the effects vary by firm type lender health has an economically and statistically significant effect on employment at small and medium firms but the data cannot reject the hypothesis of no effect at the largest or most transparent firms abstracting from general equilibrium effects i find that the withdrawal of credit accounts for between one third and one half of the employment decline at small and medium firms in the sample in the year

does government funding complement or substitute private research funding to universities abstract there is growing political pressure on universities to intensify their interaction with industry and to enlarge their own research funding options in a context characterised by increasing constraints on public spending however whether the successful achievement of such a political desired outcome is consistent with a restriction of government funding is not clear and requires further investigation as a matter of fact there is scant empirical evidence on whether and to what extent government funding affects the external funding options available to universities in particular those related to research and consulting activities by using a set of probit and tobit panel data models estimated on financial data for the whole population of italian university departments engaged in research in the engineering and physical sciences this paper provides evidence that government funding to universities complements funding from research contracts and consulting contributing to increasing universities collaboration with industry and activating knowledge transfer processes

advertising restrictions and competition in the children s breakfast cereal industry abstract in this article i analyze the consequences of advertising in the children s breakfast cereal market i take advantage of the prohibition on advertising directed at children in the province of quebec to examine the nature of advertising and to determine whether the restriction hinders competition i show that prices are higher in quebec than in canadian provinces that permit advertising this finding suggests that the informative role of advertising dominates any persuasive role since the most likely explanation is that the restriction prevented firms from announcing products existence or characteristics and thus from overcoming perceived differentiation if advertising is informative restricting it should increase the market shares of older better known brands and decrease the market shares of newer and or less well known brands empirical analysis supports this prediction market shares of established brands are larger in quebec than in the rest of canada and the opposite is true for nonest

who participates in r d subsidy programs the case of spanish manufacturing firms abstract empirical evidence on the effectiveness of r d subsidies to firms has produced mixed results so far one possible explanation is that firms and project selection rules may be quite heterogeneous both across agencies and across industries leading to different outcomes in terms of the induced additional private effort here we focus on the participation stage using a sample of spanish firms we test for differences across agencies and industries our results suggest that firms in the same industry face different hurdles to participate in different agencies programs that participation patterns may reflect a combination of agency goals and that patterns differ across high tech and low tech industries

new or used investment with credit constraints abstract used capital is cheap up front but requires higher maintenance payments later on we argue that the timing of these investment cash outflows makes used capital attractive to financially constrained firms since it is cheap when evaluated using their discount factor in contrast it may be expensive from the vantage point of an unconstrained agent we provide an overlapping generations model and determine the price of used capital in equilibrium agents with less internal funds are more credit constrained invest in used capital and start smaller firms empirically we find that the fraction of investment in used capital is substantially higher for small firms and varies significantly with measures of financial constraints

the determinants of exit in an open economy in this paper the determinants of exit are investigated for the manufacturing sector of the united states economy which has been subjected to growing international influences the analysis uses united states cross sectional data the results of the exit equation suggest that low profitability declining industry growth and displacement of incumbents by entrants foster exit international influences are also seen to have an impact on u s manufacturing exit specifically imports into an industry have a small effect on exit and protection has little influence in stemming exit

the life cycle of the u s tire industry 1 introduction a recent literature has emerged focusing on industry evolution or the dynamic patterns that industries and firms follow as they systematically evolve over time this literature is important because of the insights provided about how industries change why they change and the consequences of industrial change the year 1982 saw three fundamental contributions made to the research on the evolution of industry boyan jovanovic published the first formal model of industry evolution richard nelson and sidney winter presented their influential book on the causes and effects of this phenomenon and michael gort and steven klepper published their careful analysis of the stages of the product life cycle knowledge concerning industry dynamics and industry evolution has expanded since then despite this progress in the field of industry evolution considerable gaps remain for example we lack an adequate empirical understanding of the evolutionary process at the single industry level from the early to the late stages of its life cycle shakeouts have been identified in the literature as an integral component of this evolutionary process the sudden disappearance of large numbers of firms have been documented across a broad spectrum of industries such as steel airline carriers financial intermediaries automobiles and tires an important strand in the literature argues that the catalyst for these shakeouts is the introduction of a new dominant innovation confronted by a new technology introduced by a competitor the inability of other firms to adopt this new dominant technology presumably forces them out of the market jovanovic and macdonald 1994 made a pioneering and parsimonious contribution in this field of research by explaining patterns of number of firms output and prices of the u s tire industry despite the importance of their contribution we argue that their model does not adequately describe the key historic developments that have taken place in this or many other industries that faced a shakeout of producers 2 the domain of relevance of the jovanovic macdonald model is limited it assumes that one innovation followed by just one refinement is responsible for the nonmonotonicity in firm numbers this implies that the model is applicable only for those industries having experienced just two technologies in their entire history an initial low tech and a subsequent high tech phase most industries including the automobile tire industry that was the testing ground of jovanovic and macdonald have an ongoing history of significant improvements in product quality and productivity it seldom occurs that one innovation is dominant this is certainly true for the tire industry nelson 1987 in his study on the u s tire industry observed that there was no single technical breakthrough that unlocked the industry s potential for highspeed production nor was any individual or firm of overriding importance the advent of mass production was a cumulative process resulting from a vast number of successive small changes pp 331 2 italics added almost half a century ago reynolds 1938 p 463 described a similar process the great improvement in tire quality during the past 30 years is undoubtedly due to constant repetition of the cycle of invention and imitation we take a different approach than jovanovic and macdonald and explain the nonmonitonicity in firm numbers as resulting from gradual unit cost reduction over time leading to declining profit margins in the present paper we relate this cumulative process to the concept of learning by doing we will test the model using data of the american tire industry we do this to facilitate the comparison between our model and that of jovanovic and macdonald and because this industry is one of the few for which data are available for a long time period the process of learning by doing leading to decreasing marginal costs over time has an important impact on the number of firms in the industry

advertising and entry the case of physician services this paper examines the entry implications of physician advertising evidence suggests that advertising inhibits entry into this market nevertheless experienced physicians incumbents to whom advertising would offer the greatest financial benefit in fact advertise less a paradox that may be explained by nonfinancial concerns such as unwillingness to break well internalized professional norms against advertising physician advertising has risen sharply in recent years and it appears that this trend will continue if incumbents increasingly resort to advertising there could be a substantial redistribution of income from less well established physicians to better established ones

the heckman correction for sample selection and its critique this paper gives a short overview of monte carlo studies on the usefulness of heckman s 1976 1979 two step estimator for estimating selection models such models occur frequently in empirical work especially in microeconometrics when estimating wage equations or consumer expenditures it is shown that exploratory work to check for collinearity problems is strongly recommended before deciding on which estimator to apply in the absence of collinearity problems the full information maximum likelihood estimator is preferable to the limited information two step method of heckman although the latter also gives reasonable results if however collinearity problems prevail subsample ols or the two part model is the most robust amongst the simple to calculate estimators

persuasion or information the economics of prescription drug advertising the economic and welfare effects of advertising have been extensively studied over the last half century however these efforts have not led to a consensus either as to the effects or the value of advertising economists continue to reach polar conclusions that appear to be derived mainly from preconceptions of the social desirability of advertising on the one hand is research that emphasizes promotion s ability to create artificial product differentiation and thereby produce informational confusion 1 this line of research stresses the empirical association of extensive advertising with high concentration and high accounting profits evidence judged to support increased market power and entry barrier effects 2 a contrary body of research emphasizes the value of advertising in providing information and hence in promoting competition 3 the empirical findings most consistent with this view are that prices paid by consumers in selected markets are lower with advertising than without it 4

fixed costs sunk costs entry barriers and sustainability of monopoly this paper shows that i fixed costs of sufficient magnitude assure the existence of a vector of sustainable prices for the products of a natural monopolist prices making him invulnerable against entry ii nevertheless fixed costs do not constitute barriers to entry that is they need not have undesirable welfare consequences iii indeed in market forms that we call perfectly contestable large fixed costs are completely compatible with many desirable attributes of competitive equilibrium iv sunk costs do however constitute barriers to entry and v finally the profit and welfare consequences of entry barriers are described formally in this paper it is shown that i fixed costs of sufficient magnitude assure the existence of a vector of sustainable prices a set of product prices that make a natural monopolist invulnerable against successful entry ii nevertheless costs that are truly fixed do not constitute barriers to entry that is they do not have the welfare consequences normally attributed to barriers to entry iii indeed there are markets of a form which we call perfectly contestable markets and whose properties may be approximated in practice in which large fixed costs are completely compatible with many if not most of the desirable attributes of competitive equilibrium iv sunk costs do however constitute barriers to entry and v finally the resource allocation problems that stem from fixed costs are formally identical with those that accompany public goods both their sources and their character are the same thus the rationale for public supply of public goods may be no different from that pertaining to nationalization of natural monopolies

entry competition and regulation in uk telecommunications in a formerly monopolized industry now subject to competition there is likely to be considerable interaction between business strategy and regulation the paper illustrates the development of this process in uk telecommunications it sets out a framework in which competition between incumbent and entrants takes the form of a race on the part of the former to bridge the innovation gap and on the part of the latter to accumulate the necessary strategic assets including regulatory assets the strategies of major uk fixed link telecommunications firms are analyzed in this light and regulatory policy towards vertical separation in mobile telephony is also described the article draws attention to the crucial role which the regulator plays in assisting entrants to gain access to strategic assets including information copyright 1996 by oxford university press

entry and exit from manufacturing industries symmetry turbulence and simultaneity some empirical evidence from greek manufacturing industries 1982 1988 the interdependence between entry and exit of firms into manufacturing industries is the focus of this research when both entry and exit equations are estimated separately the results support the existence of strong symmetry in their determinants when however entry and exit are estimated within a simultaneous equation framework the empirical evidence does not offer sufficient grounds to support the notion that entry and exit are simultaneously linked instead it seems that they are two contemporaneously related processes which respond in like fashion to the structural characteristics found in particular industries their linked response is also extended to factors unaccounted for by the individual entry and exit formulations and this expresses itself in significant contemporaneous correlation between the entry and exit equation residuals the change in the identities of firms operating implied by the positive correlation between entry and exit may then be attributed to industry turbulent condition