r d concentration under endogenous fixed costs evidence from genetically modified corn seed we examine the role of fixed costs in research and development r d in the market for genetically modified gm corn seed in a mixed model of horizontal differentiation by genetic traits and vertical differentiation by productivity we derive the empirically testable lower bounds to r d concentration when r d investments and market entry are jointly determined when r d investments translate into higher product quality industries are said to be characterized by endogenous fixed costs such that the lower bound to r d concentration increases with market size but is less than the lower bound to market concentration based on sales using data on field trial applications of gm corn seed we estimate the lower bound to r d concentration and find evidence of endogenous fixed costs with r d concentration that is significantly greater than perfectly competitive levels these endogenous fixed costs imply that concentration in the agricultural biotechnology industry is occurring due to the nature of r d investment in product quality and not through anticompetitive practices adjusting for past merger and acquisition activity significantly raises the lower bound for infinitely sized markets but has no impact upon current market sizes implying the industry may still undergo additional consolidation

explaining the attacker s advantage technological paradigms organizational dynamics and the value network abstract understanding when entrants might have an advantage over an industry s incumbent firms in developing and adopting new technologies is a question which several scholars have explained in terms of technological capabilities or organizational dynamics this paper proposes that the value network the context within which a firm competes and solves customers problems is an important factor affecting whether incumbent or entrant firms will most successfully innovate in a study of technology development in the disk drive industry the authors found that incumbents led the industry in developing and adopting new technologies of every sort identified by earlier scholars at component and architectural levels competency enhancing and competency destroying incremental and radical as long as the technology addressed customers needs within the value network in which the incumbents competed entrants led in developing and adopting technologies which addressed user needs in different emerging value networks it is in these innovations which disrupted established trajectories of technological progress in established markets that attackers proved to have an advantage the rate of improvement in product performance which technologists provide may exceed the rate of improvement demanded in established markets this mismatch between trajectories enables firms entering emerging value networks subsequently to attack the industry s established markets as well

an analysis of bundle pricing the case of biotech seeds biotechnology has provided opportunities for strategic management and pricing of patented products this article analyzes the economics and strategy of bundling and bundle pricing of biotech traits in seeds when the bundling of genes traits is decided by biotech firms firms may choose among subadditive pricing component pricing or superadditive pricing strategies we argue that complementarity among component genes contributes to subadditive pricing while substitution among components contributes to superadditive pricing the nature of bundle pricing is explored empirically using u s seed corn data from 2000 to 2007 we document that subadditive bundle pricing of traits is commonly found in the seed corn market however we also present evidence of superadditive pricing and component pricing the presence of different pricing and bundling strategies suggests a rapidly advancing and complex market the preponderance of subadditive pricing suggests that trait bundling offers benefits to farmers exhibiting strong demand for multiple complementary genetic traits jel classifications l4 l13 l65

technological regimes and schumpeterian patterns of innovation this paper proposes that the specific pattern of innovative activities in an industry can be explained as the outcome of different technological learning regimes a technological regime is defined by the particular combination of technological opportunities appropriability of innovations cumulativeness of technical advances and properties of the knowledge base building upon the distinction between schumpeter mark i and schumpeter mark ii industries this paper provides empirical estimates of the relationships between indicators of the schumpeterian patterns of innovation concentration of innovative activities stability in the hierarchy of innovators and importance of new innovators and indicators of the variables defining technological regimes

valuing product innovation genetically engineered varieties in us corn and soybeans we develop a discrete choice model of differentiated products for us corn and soybean seed demand to study the welfare impact of genetically engineered ge crop varieties using a unique data set spanning the period 1996 2011 we find that the welfare impact of the ge innovation is significant in the last five years of the period analyzed our preferred counterfactual indicates that total surplus due to ge traits was 5 18 billion per year with seed manufacturers appropriating 56 of this surplus the seed industry obtained more surplus from ge corn whereas farmers received more surplus from ge soybeans

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

adoption of green chemistry an analysis based on us patents abstract green chemistry patents are an indicator of environmental innovation and r d over 3200 green chemistry patents were granted in the us patent system between 1983 and 2001 with most assigned to the chemical sector the university and government sectors place greater emphasis on green chemistry than most industrial sectors worldwide the emphasis on green chemistry technology relative to chemical plastic rubber and polymer technologies has increased since 1988 the united states appears to have a competitive advantage in green chemistry the most rapid growth in the emphasis on us green chemistry patents coincides with revisions to major us environmental laws in the late 1980s and early 1990s however the ratio of green chemistry patents to patents in other areas of chemical sciences in heavily regulated industries are low suggesting that these industries did not necessarily embrace green chemistry as a means to reduce their regulatory burden

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

agricultural biotechnology s complementary intellectual assets we formulate and test a hypothesis for the dramatic restructur ing that the plant breeding and seed industry has recently undergone the reorganization can be explained in part by the desire to exploit comple mentarities between intellectual assets needed to create genetically mod ified organisms this hypothesis is tested using data on agricultural biotechnology patents notices for field tests of genetically modified organisms and firm characteristics the presence of complementarities is identified with a positive covariance in the unexplained variation of asset holdings results indicate that coordination of complementary assets has increased under the consolidation of the industry ne of the central problems in the economics of inno vation concerns how industries change as they absorb fundamental research breakthroughs rarely has change been more pronounced than in agriculture following the introduction of recombinant dna technology and affiliated techniques of genetic engineering by offering breeders the ability to alter plant traits by directly manipulating se quences of genetic code tools of agricultural biotechnology change the possibilities for crop improvement profoundly the new techniques enhance the speed and precision of agricultural research and development r d while ex panding the space of potential new products seed firms now offer farmers crop varieties embodying new ap proaches for controlling pests managing physical stresses on plants increasing crop yields and growing differenti ated quality enhanced crops concurrent with these technical changes in the r d process the agricultural inputs industry has over the past two decades witnessed a comprehensive restructuring sev eral large chemical firms including monsanto dow and dupont moved aggressively into plant biotechnology mak ing huge investments in the life sciences as newly minted agronomic systems companies these firms acquired all of the large national seed firms in north america including pioneer dekalb asgrow garst and others meanwhile the research intensive agricultural biotechnology sector from its appearance in the 1980s as a large set of small startup firms had by the end of the 1990s already reached a second stage with most of the startups either folded or acquired by the new agronomic systems giants the industry s consoli dation was surprising not only for its rapid pace and com prehensive scope but also for the extremely high valuations at which some firms were acquired in 1997 for example monsanto acquired holdens foundation seeds of wil liamsburg iowa together with two marketing subsidiaries for 1 02 billion 25 times the annual sales of the mature privately held firm whose revenues derived entirely from the breeding and distribution of corn seed the emergent industry structure with a relatively small number of tightly woven alliances each organized around a major life sciences firm each vertically integrated from basic r d through to marketing stands in contrast to the more diffuse structure of twenty years ago this structure is likewise noteworthy when one considers trends in other research intensive fields the pharmaceutical biotechnology industry for example maintains a large number of free standing firms specializing in r d and earning revenues through various licensing agreements majewski 1998 hall and ziedonis 2001 observe that the u s semiconduc

transition pathways revisited established firms as multi level actors in the heavy vehicle industry abstract the multi level perspective on sustainability transitions positions established firms incumbents as defenders of existing technologies at the regime level by contrast it positions new entrants at the niche level as promoters of new technologies this paper challenges the positioning of firms as actors on either regime or niche levels based on a comparative analysis of technology strategies in the heavy vehicle industry the paper shows that established firms are active at both levels developing several technology alternatives simultaneously this means that incumbents technology strategies determine important parts of the required niche regime interactions the paper also shows how incumbents may pursue contrasting technology strategies while some adopt a dualistic approach keeping regime and niche level activities technologically and commercially separate others develop integrated strategies where niche activities are leveraged to impact upon the regime level the cases studied illustrate how the success of such integrated strategies depends on the emergence of bridging policies bridging policies are relevant both for linking early niche markets to broader regime level markets and for supporting further technological advancements of niche markets

an analysis of selectivity in the productivity evaluation of biotechnology an application to corn we investigate selectivity bias in the evaluation of biotech hybrid productivity the analysis is applied to experimental data on wisconsin corn yields from 1990 to 2010 relying on a heckman like factor that accounts for selectivity we find evidence of selection bias indicating that some of the observed yield advantage associated with gm hybrids can be attributed to their conventional genes we document how the rising market concentration of biotech firms has contributed to increasing selectivity bias in corn yield the impact however is offset by the negative effect of the rising adoption rate of gm corn on selectivity bias copyright 2013 oxford university press

optimal bundling and pricing under a monopoly contrasting complements and substitutes from independently valued products we develop an analytical model of contingent valuations and address two questions of import to a monopolist i should a given pair of complements or substitutes be sold separately pure components together pure bundling or both mixed bundling and at what prices ii how do optimal bundling and pricing strategies for complements and substitutes differ from those for independently valued products we find that the combination of marginal cost levels and the degree of complementarity or substitutability determines which of the three bundling strategies is optimal complements and substitutes should typically be priced higher than independently valued products

an analysis of bundle pricing in horizontal and vertical markets the case of the u s cottonseed market the u s cottonseed market has seen the rapid development and adoption of seeds with differing bundles of genetically modified gm traits it has also seen an increase in vertical integration by biotechnology firms in this article we investigate the price impacts associated with structural changes in the u s cottonseed market from 2002 to 2007 we develop a structural model to examine the substitution complementarity relationships among cottonseeds sold with different genetic trait bundles and under different vertical arrangements we examine the price impacts emanating from product differentiation market concentration and market size the econometric investigation finds evidence of subadditive bundle pricing in patented biotech traits while higher own market concentrations are found to be associated with higher prices we also uncover evidence of cross product complementarity effects that lead to lower prices simulations are used to evaluate net price effects illustrating the usefulness o ft he approach in the analysis of changing market structures

tying foreclosure and exclusion in recent years the leverage theory of tied good sales has faced heavy and influential criticism in an important sense though the models used by its critics are actually incapable of addressing the leverage theory s central concerns here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power the mechanism through which this leverage occurs its profitability and its welfare implications are discussed in detail copyright 1990 by american economic association

bundling and licensing of genes in agricultural biotechnology we examine the strategic incentive for gene holders to vertically integrate with seed companies and chemical input companies with homogeneous conventional seeds we find that a pure bundling strategy produce the genetically modified seed only is dominant when the gene holder and breeder are respectively the monopolistic producers of genetically modified and conventional seeds they may commit to mixed bundling supply both genetically modified and conventional seed to deter potential entry to the conventional seed market a vertical merger may solve the credibility issue of the mixed bundling commitment through third party licensing agreements in the conventional seed market copyright 2009 oxford university press

to bundle or not to bundle commodity bundling is studied in an environment where the dispersion of valuations unambiguously decreases when two or more goods are sold as a bundle only bundling is more likely to dominate separately selling the goods if marginal costs are low relative to the average valuation or if the distribution of valuations is very peaked around the mean

measuring market power and cost efficiency effects of industrial concentration in this paper i show how appelbaum s framework for testing price taking behavior in a single industry can be formally extended to consider concentration explicitly in so doing i separate the market power effect of concentration from its cost efficiency effect data from the us beef packing industry are used to illustrate an empirical application of the model the findings support oligopsonistic market power and slaughter cost efficiency in the industry however the cost efficiency effect outweighs the market power effect

equilibrium vertical foreclosure the authors formulate a complete but analytically simple equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims the model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals and the potential holdout problem in this fully specified model vertical foreclosure can emerge in equilibrium copyright 1990 by american economic association

vertical integration in the presence of upstream competition we analyse vertical integration when there is upstream competition and compare outcomes to the case where upstream assets are owned by a single agent i e upstream monopoly in so doing we make two contributions to the modelling of strategic vertical integration first we base industry structure namely the ownership of assets firmly within the property rights approach to firm boundaries second we model the potential multilateral negotiations using a fully specified non cooperative bargaining model designed to easily compare outcomes achieved under upstream competition and monopoly given this we demonstrate that vertical integration can alter the joint payoffs of integrating parties in ex post bargaining however this bargaining effect is stronger for firms integrating under upstream competition than upstream monopoly we also consider the potential for integration to internalise competitive externalities in manner that cannot be achieved under non integration we demonstrate that ex post monopolization is more likely to occur when there is an upstream monopoly than when there is upstream competition our general conclusion is that the simple intuition that the presence of upstream competition can mitigate and reduce the incentives for socially undesirable vertical integration is misplaced and depending upon the strength of downstream competition i e product differentiation the opposite could easily be the case journal of economic literature classification number l42

patterns of innovation and organizational demography in emerging sustainable fields an analysis of the chemical sector this paper examines the patterns of environmental innovation in the chemical sector and focuses in particular on detecting whether the rise of sustainable chemistry technologies sct has stimulated the emergence of new organizations this question is important to assess the extent to which sct are sustaining the technological advantage of industry incumbents or are creating opportunities for new firms aspiring to develop radically new environmental innovations we found that sct still represent a relatively low proportion of chemical technologies and that they have not stimulated in a significant way the emergence of new firms however the importance of new firms has grown in the last 20 years and their technologies seem to have a higher potential of radicalness than incumbents technologies this indicates that although incumbents advantage remains strong a small group of young firms has started to weaken such advantage moreover the important role played by research organizations in generating sct may signal that technological opportunities are expanding and that some governments in particular the us government are committed to develop sct these results suggest that if supported by effective policies technological ferment in the field which at the present appears still limited has a potential of growth

sectoral systems of innovation and production the concept sectoral system of innovation and production provides a multidimensional integrated and dynamic view of sectors it is proposed that a sectoral system is a set of products and the set of agents carrying out market and non market interactions for the creation production and sale of those products a sectoral systems has a specific knowledge base technologies inputs and demand agents are individuals and organizations at various levels of aggregation they interact through processes of communication exchange co operation competition and command and these interactions are shaped by institutions a sectoral system undergoes change and transformation through the co evolution of its various elements 2002 elsevier science b v all rights reserved

multiproduct monopoly commodity bundling and correlation of values through what selling strategy can a multiproduct monopolist maximize his profits when his knowledge about individual consumers preferences is limited one possibility extensively studied in the context of a single good monopoly is to use quantity dependent pricing as a means of discriminating among customers with differing tastes see for example oi 1971 and maskin and riley 1984 an alternative technique for price discrimination first suggested by stigler 1968 and analyzed further by adams and yellen 1976 is for the monopolist to package two or more products in bundles rather than selling them separately through a series of examples adams and yellen illustrate that bundling can serve as a useful price discrimination device even when all consumers willingnesses to pay for each of the goods individually are unaffected by whether they are also consuming the other product a typical example is illustrated in figure i adapted from figure iv in adams and yellen where there are two goods three consumers ab c who consume at most one unit of each good with reservation values for each good that are independent of whether the other good is consumed and zero costs of production there a bundle offered at a price of 100 fully extracts all potential surplus which would be impossible pricing the goods independently unfortunately though these authors do not provide any general characterization of the circumstances in which bundling is actually a multiproduct monopolist s optimal strategy their examples however such as figure i create the impression that the profitable use of bundling

schumpeterian patterns of innovation are technology specific this paper examines the patterns of innovative activities at the technological and country levels using patent data for 49 technological classes in six countries usa japan germany france united kingdom and italy it is shown that the patterns of innovative activities differ systematically across technological classes but are remarkably similar across countries for each technological class in particular two groups of technological classes are identified schumpeter mark i and schumpeter mark ii in these two groups innovative activities are structured and organized in different ways the first represents a widening pattern concentration of innovative activities is low innovators are of small economic size stability in the ranking of innovators is low and entry of new innovators is high the second represents a deepening pattern concentration of innovative activities is higher than in the first group innovators are of larger economic size stability in the ranking of innovators is greater and entry is lower the former group comprises mechanical technologies and traditional sectors while the latter includes chemicals and electronics this result suggests that technology related factors such as technological regimes defined in terms of conditions of opportunity appropriability cumulativeness and properties of the knowledge base play a major role in determining the specific pattern of innovative activities of a technological class across countries within these constraints country specific factors introduce differences across countries in the pattern of innovative activities for a specific technological class finally the relationships between the specific features of the patterns of innovative activities and international technological specialization are examined technological advantages appear in general to be linked to higher degrees of asymmetries among innovators higher stability of the ranking of innovators smaller economic size of the innovating firms and lower entry rates of new innovators these relationships however are different in the two groups of technological classes in schumpeter mark i widening technological classes international technological specialization is associated with relatively higher degrees of asymmetries among innovators and entry of new innovators as well as smaller firm size while in schumpeter ii deepening technological classes international technological specialization is linked to the existence of a stable but competitive core of persistent innovators

an analysis of the pricing of traits in the u s corn seed market we investigate the pricing of traits in the u s corn seed market under imperfect competition in a multiproduct context we examine how substitution complementarity relationships among products can affect pricing this is used to motivate generalizations of the herfindahl hirschman index capturing cross market effects of imperfect competition on pricing the model is applied to pricing of u s conventional and biotech seeds from 2000 to 2007 we reject the standard component pricing in biotech traits in favor of subadditive bundle pricing the econometric estimates show how changes in market structure as measured by both own and cross herfindahl indexes affect u s corn seed prices

composition of energy outflows embodied in the gross exports of the construction sector abstract energy sustainability has great importance in the development of the economy and society since energy is a necessary driving force for economic growth the construction sector accounts for a greater percentage of global energy consumption than most other sectors the structure of exports in the current trade pattern has affected the transmission of sectoral embodied energy through changes in regional economies this paper uncovers the composition of productions for gross exports and examines embodied energy from the viewpoint of value added through a case study in the construction sector multi regional input output tables have been used to process the data relevant to economic trade and energy input while the production of gross exports in 40 countries has been decomposed into the exports of value added trade and the exports of vertical specialisation trade based on data from world input output tables the decomposition and reorganisation clearly show the pathways and composition in the trade activities of gross exports the embodied energy of value added exports accounted for 60 90 of gross exports in the construction sectors of 37 countries the framework for sharing production in the construction sector still dominated the connections among many countries especially the trade relationships between large economies in the process of vertical specialisation trade the foreign value added of the construction sector was still limited by significant events such as the global financial crisis the construction sectors were ranked between 5 and 11 in all 35 domestic sectors in 34 countries as measured by the total export of embodied energy so the creation of high value added is enhanced by improvement in energy efficiency in the construction sector however the reduction of energy consumption in the construction sector may indirectly increase energy consumption in its upstream sectors because of the connection between exports and related production the balance between energy consumption and creation of value added in exports is an important consideration for government supervision and sectoral development local construction markets need to strengthen their ability in the supply of intermediate goods which benefits value added exports and domestic demand moreover developing national and international supply chains can positively offset the impact of the imbalanced distribution of globalised production

the underemphasized role of established firms as the sources of major innovations we argue that established firms including industry incumbents and diversifying entrants play vital all underemphasized roles as the sources of major innovations in many industries the study presents empirical evidence showing that established firms are often sources of major innovations in the telecommunications and medical sectors we conduct an exploratory investigation of how variation in the types of technical and market change influence whether industry incumbents diversifying entrants or nets companies are the sources of major innovations copyright 1996 by oxford university press