the bidder exclusion effect we introduce a new simple to compute test of independence of valuations and the number of bidders for ascending button auctions with symmetric conditionally independent private values the test involves estimating the expected revenue drop from excluding a bidder at random which can be computed as a scaled sample average of a difference of order statistics this object also provides a bound on counterfactual revenue changes from optimal reserve pricing or bidder mergers we illustrate the approach using data from timber auctions where we find some evidence that bidder valuations and the number of participants are not independent

optimal nonparametric estimation of first price auctions this paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auctioni data considering first price sealed bid auction models within the independent private value paradigm we show that the underlying distribution of bidders private values is identified from observed bids and the number of actual bidders without any parametric assumptions using the theoiy of minimax we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data we then propose a two step kernel based estimator that converges at the optimal rate

new blood as an elixir of youth effects of human capital tenure on the explorative capability of aging firms the relationship between firm age and innovation has been an enduring topic of interest we contribute to this research by studying how the effect of firm age on the quality of explorative and exploitative innovations is affected by the firm specific and industry tenure of the talent resources employees that the firm utilizes we start with the baseline predictions that firm age is related to the development of better exploitative innovations and worse explorative innovations however the tenure of employees intervenes in these relationships by way of bringing in new knowledge mental models and beliefs we predict that longer firm specific and industry tenure of employees enhances the positive effect of firm age on the quality of exploitative innovations while amplifying the negative effect of firm age on the quality of explorative innovations in addition for both the baseline and the moderating effect we also formulate a prediction comparing the quality of explorative innovations with those of

industry dynamics and the distribution of firm sizes a nonparametric approach the aim of this paper is to analyze the evolution of the size distribution of young firms within some selected industries trying to assess the empirical implications of different models of industry dynamics the model of passive learning jovanovic 1982 the model of active learning ericson and pakes 1995 and the evolutionary model audretsch 1995 we use a non parametric technique the kernel density estimator applied to a data set from the italian national institute for social security inps consisting in 12 cohorts of new manufacturing firms followed for 6 years since the patterns of convergence to the limit distribution are different between industries we conclude that the model of passive learning is consistent with some of them the active exploration model with others the evolutionary model with all of them

structural estimation of the affiliated private value auction model we consider the structural estimation of the affiliated private value apv model in first price sealed bid auctions the model allows for bidders individual efficiencies and opportunity costs while permitting dependence among bidders private values through affiliation we establish the nonparametric identification of the apv model characterize its theoretical restrictions and propose a computationally convenient and consistent two step nonparametric estimation procedure for estimating the joint private value distribution from observed bids using simulated bid data we provide a step by step guide on how to implement our procedure and show the good behavior of our estimator in small samples

equilibrium in auctions with entry the authors model entry incentives in auctions with risk neutral bidders and characterize a symmetric equilibrium in which the number of entrants is stochastic the presence of too many potential bidders raises coordination costs that detract from welfare the authors show that the seller and society can benefit from policies that reduce market thickness i e the relative abundance of buyers their analysis extends well known revenue equivalence and ranking theorems but also demonstrates that variations in the auction environment affect optimal policies e g reservation prices in ways not anticipated by models that ignore entry copyright 1994 by american economic association

evolutionary theorizing in economics modern economic analysis oriented toward understanding the workings of economies that make extensive use of markets came into existence with three guiding questions all central in adam smith s 1776 1937 the wealth of nations one question concerned order without any central authority guiding and commanding action how is economic activity coordinated the second question was the challenge of explaining the prevailing constellation of prices inputs and outputs what explains the price of labor and the rent of land the third question addressed the processes of economic progress or development smith and other early economists clearly were impressed by the inventiveness the energy and the growing productivity generated by the evolving market economy how to understand its dynamics the first two questions have defined continuing central concerns of the discipline of economics since they first were posed over two centuries ago when not posed in the context of an economy that is understood as in the process of developing they seem to pull the focus of theorizing toward equilibrium conditions the third question concerned with the processes driving economic progress pulls the theorizing toward an evolutionary orientation the question of economic development has waxed and waned in centrality to the discipline as has the importance of evolutionary theorizing during the first several decades of the twentieth century evolutionary thinking and language was widespread in economics but as one contrasts the economic

the market evolution and sales takeoff of product innovations in contrast to the prevailing supply side explanation that price decreases are the key driver of a sales takeoff we argue that outward shifting supplyand demand curves lead to market takeoff our fundamental idea is that sales in new markets are initially low because the first commercialized forms of new innovations are primitive then as new firms enter actual and perceived product quality improves and prices possibly drop which leads to a takeoff in sales to provide empirical evidence for this explanation we explore the relationship between takeoff times price decreases and firm entry for a sample of consumer and industrial product innovations commercialized in the united states over the past 150 years based on a proportional hazards analysis of takeoff times we find that new firm entry dominates other factors in explaining observed sales takeoff times we interpret these results as supporting the idea that demand shifts during the early evolution of a new market due to nonprice factors is the key driver of a sales takeoff

quantifying the cost of excess market thickness in timber sale auctions abstract in auctions with endogenous entry theory predicts that too many potential bidders or the excess market thickness may actually decrease the seller s expected revenue and the social welfare generated by the auction this paper proposes a computationally easy method for estimating the optimal number of potential bidders in timber sale auctions with endogenous entry and an uncertain number of active bidders and then quantifies the cost of excess market thickness it is found that the welfare loss due to the excess market thickness is moderate in this market

the legacy of steven klepper industry evolution entrepreneurship and geography this introductory essay of the special issue honoring steven klepper provides a synthesis of his work and places the articles of the special issue within the context of his scholarship steven klepper s pioneering work linked life cycle patterns in industry evolution to underlying micro level firm innovation dynamics and employee entrepreneurship and to the macro level implications regarding geographical agglomeration and the growth of economies taken together the lifetime of klepper s research provides an integrated account of the key industrial mechanisms at work and also sets the stage for future research as is elaborated in individual contributions to the special issue

a competitive analysis of fail fast shakeout and uncertainty about consumer tastes abstract contemporary business strategy advocates fail fast the practice of launching a product early before the resolution of uncertainty about how product characteristics matter to consumers we consider how uncertainty about consumer preferences can contribute to shakeout when moving from the infant stage of an industry when this uncertainty is large to the mature stage of an industry when this uncertainty is small we find that consistent with the empirical literature due to firms uncertainty about consumers preferences there is excessive entry initially and on average positive shakeout in the number of firms in the market in the mature phase of the industry the paper also presents a new way to model uncertain preferences in product differentiation models that may prove useful in other applications

dynamic entry and exit with uncertain cost positions abstract we study the dynamics of entry and exit based on firms learning about their relative cost positions each firm s marginal cost of production is its own private information thereby facing ex ante uncertainty about its cost position the inelastic market demand can accommodate only a fraction of firms to operate and thus only firms with relatively lower costs are viable in the long run some firms in the market will exit if excessive entry or overshooting occurs we derive the unique symmetric sequential equilibrium the equilibrium properties are consistent with empirical observations i entry occurs gradually over time with lower cost firms entering earlier than higher cost firms ii exiting firms are among the ones that entered later indeed in the last period moreover equilibrium overshooting probability is shown to always be positive and decreasing over time

user industry spinouts downstream industry knowledge as a source of new firm entry and survival recent scholarship on entrepreneurship suggests that the pre entry know how of start ups embodied in their founders affects not only entry but also performance although prior work focuses on new entrants from the focal industry i e employee spinouts and academic organizations i e university spinoffs this study identifies and examines a hybrid category of start ups from downstream user industries which we call user industry spinouts we draw from the literature on evolutionary theory user innovation and industrial dynamics to propose that given the unique combination of knowledge inherited by these entrants their choices at entry and their ability to survive in the focal industry will differ with respect to other start ups we do this by extending existing work on new firm creation to investigate entry and performance in different product markets our findings based on a dataset of start ups in the semiconductor industry over a 10 year period 1997 2007 show that user industry spinou

firm size and the nature of innovation within industries the case of process and product r d the effect of firm size on the allocation of r d effort between process and product innovation is examined it is hypothesized that relative to product innovations process innovations are less saleable in disembodied form and spawn less growth this implies that the returns to process r d will depend more on the firm s output at the time it conducts its r d than the returns to product r d incorporating this distinction in a simple model the authors derive and test predictions about how the fraction of r d devoted to process innovation varies with firm size within industries

a theory of firm growth learning capability knowledge threshold and patterns of growth abstract this paper focuses on the dual role of r d knowledge generation and the technological competence enhancing effect of r d and its implication for the endogenous evolution of r d productivity and the pattern of firm growth in particular based on the evolution of firm specific r d productivity or technological competence this paper derives a simple r d based model of firm growth capable of explaining various aspects of firm growth the model proposes three prototype patterns of firm growth depending on both firm and industry specific characteristics the former includes firm specific technological competence enhancing capability and the initial level of technological knowledge and the latter includes industry specific r d appropriability specifically firms with low technological competence enhancing capability tend to follow a convergent growth pattern in which firm growth gradually declines while firms with high technological competence enhancing capability tend to exhibit either a sustained or a vicious growth pattern depending on the initial size of their technological knowledge stock an empirical analysis of unique data on firm growth and technological capability provides supportive evidence for the role of technological competence enhancing capability in conditioning the pattern of firm growth

timber sale auctions with random reserve prices this paper analyzes first price sealed bid auctions of standing timber organized by the french forest service office national des forets onf a feature of these auctions is that they are held wi

a shape constrained estimator of bidding function of first price sealed bid auctions this paper is concerned with economic analysis of first price sealed bid auctions with risk averse bidders the identification is based on exogenous variations in the number of bidders across auctions we present a shape constrained estimator of the bidding function which satisfies the theoretical properties of passing through origin positivity and monotonicity the underlying utility function and bidder value distribution are readily obtained from the estimated bidding function monte carlo simulations demonstrate good performance of the proposed estimator

a review of uncertainties in technology experience curves abstract the use of log linear experience curves or learning curves relating reductions in the unit cost of technologies to their cumulative production or installed capacity has become a common method of representing endogenous technical change in energy economic models used for policy analysis yet there are significant uncertainties in such formulations whose impact on key model results have been insufficiently examined or considered this paper reviews the major types of uncertainty in log linear experience curves and their effect on projected rates of cost reduction uncertainties are found not only in the learning rate parameter of a log linear model but also in the functional form that determines the shape of an experience curve evidence for alternative forms such as an s shaped curve is reviewed along with case studies that demonstrate the uncertainties associated with cost increases during early commercialization of a technology a phenomena that is widely recognized but rarely quantified or incorporated in learning models additional factors discussed include the effects of learning discontinuities institutional forgetting and the influence of social economic and political factors we then review other models of causality which aim to improve modelers ability to explain and predict the influence of other underlying processes that contribute to technology cost reductions in addition to learning ignoring other types of underlying mechanisms can create a false sense of precision and overestimate the true contribution of learning currently however uncertainties in such multi factor models remain large due to the difficulties of estimating key parameters such as private sector r d investments and extending models of a specific technology to a broader suite of technologies and cost projections pending the development and validation of more robust models of technological change we suggest ways to significantly improve the characterization and reporting of current learning model uncertainties and their impacts on the results of energy economic models to help reduce the potential for drawing inappropriate or erroneous policy conclusions

survival analysis of the spanish hotel industry abstract the main objective of this study is an analysis of survival in the spanish hotel industry we used a sample of 1033 hotels opened from 1997 to 2009 examining financial and non financial variables including size location type of hotel management economic and financial structure and the year they opened whether during an expansion or crisis period the methodology included an econometric analysis of survival using the non parametric kaplan meier estimator of constructed variables in order to detect the particular influence of each variable semi parametric regression was done with the cox proportional hazards model confirming which variables clearly influenced the survival of hotels and which signs existed for each analysed variables influence the survival of hotels depends on their size location management and launch in a time of prosperity however survival rates were not significantly tied to particular types of hotels or configurations of their economic and financial structures

entry in monopoly market this paper develops new empirical models of market concentration from game theoretic models of entry we construct our models from inequality conditions that describe entrants equilibrium strategies in simultaneous move and sequential move games and use them to study the effects of entry in isolated monopoly markets for new automobiles from estimates of the market size necessary to support one and two dealers we conclude that monopoly dealers do not block the entry of a second dealer we also find that entry does not cause price cost margins to fall by much

nonparametric estimation of utility function in first price sealed bid auctions i propose a simple method to nonparametrically estimate the utility function in first price sealed bid auctions when bidders participation is exogenous using a pair of bid densities each for a different number of bidders i establish a contraction mapping that converges to the true utility function the method employs nonparametric estimates in place of the true bid densities to construct the contraction mapping and computes the utility function by iterating the contraction operator a monte carlo study shows that the method approximates the true utility function and valuation density

generic drug industry dynamics both the economics literature and the business press suggest that a typical pattern for a new industry or what jovanovic and macdonald 1994 call an invention i s to have an initial phase in which a small number of firms each earn significant profits followed by a phase in which rapid entry of new firms leads to increased competition and dissipation of some of those profits often accompanied by a shakeout whereby only a few large firms remain especially if subsequent innovations increase the optimal scale although this pattern seems to characterize many industries the length of time during which early movers retain their profits how prices adjust during the entry process and the

submarket dynamics and innovation the case of the us tire industry beginning in 1922 the rate of exit of us tire producers increased sharply and the industry began a severe and protracted shakeout just 5 years earlier the tire industry experienced a surge in entry that led to a rise of over 80 in the number of producers we propose an explanation for this episode based on the idea of industry submarkets which we incorporate in a model of shakeouts we test this theory and alternative explanations for the surge in entry and exit and the shakeout using a novel data set on patenting in tires and production in the early 1920s of the cord tire a key innovation we feature in our theory our analysis suggests that the development of a new submarket can open up opportunities for entry but also stimulate innovation and in the process reinforce the advantages of the leading incumbents accentuating the shakeout of producers copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

risk aversion and optimal reserve prices in first and second price auctions abstract we analyze the effects of buyer and seller risk aversion in first and second price auctions in the classic setting of symmetric and independent private values we show that the seller s optimal reserve price decreases in his own risk aversion and more so in the first price auction the reserve price also decreases in the buyers risk aversion in the first price auction thus greater risk aversion increases ex post efficiency in both auctions especially that of the first price auction at the interim stage the first price auction is preferred by all buyer types in a lower interval as well as by the seller

uniqueness of equilibrium in sealed high bid auctions abstract for the case of two buyers we show that equilibrium in the sealed high bid auction is unique when i buyers reservations prices are drawn independently from distributions with finite support and positive mass at the lower endpoint ii buyers have private values and iii buyers preferences are log supermodular for more than two buyers we obtain the same result under the additional assumptions that iv buyers with the same reservation price have the same preferences v buyers are risk neutral or risk averse with non increasing absolute risk aversion and vi the supports of the different buyers distributions of reservation prices have the same upper endpoint

entry and competition effects in first price auctions theory and evidence from procurement auctions motivated by several interesting features of the highway mowing auction data from the texas department of transportation tdot we study three competing procurement auction models with endogenous entry our entry and bidding models provide several interesting implications for the first time we show that even within an independent private value paradigm as the number of potential bidders increases bidders equilibrium bidding behaviour can become less aggressive and the expected procurement cost may rise because the entry effect is always positive and may dominate the negative competition effect we then develop structural models of entry and bidding corresponding to the three models under consideration controlling for unobserved auction heterogeneity and use the recently developed semi parametric bayesian estimation method to analyse the data we select the model that best fits the data and use the corresponding structural estimates to quantify the entry effect and the competition effect with regard to the individual bids and the procurement cost copyright 2009 wiley blackwell

the place of entrepreneurship in the economics that might have been it is a familiar observation that entrepreneurship is not easily accommodated within the framework of neoclassical economic theory drawing inspiration from an ancient critique of neoclassicism by veblen q j econ 12 4 373 397 1898 this paper attributes the difficulty to the tension between normative accounts of decision making as in mainstream theory and ideas of causation that are standard in the sciences normative theories naturally privilege the conjectured future over the experienced past in the quest for explanatory factors evolutionary theories elucidate instead the mechanisms of cumulative causation veblen that perpetually produce the present from the past entrepreneurship of the innovative schumpeterian kind seizes opportunities that emerge in complex evolving contexts of technological and institutional change a theory that gives due weight to cumulative causation sheds greater light on these processes than prevailing mainstream theory can and that is a key advantage of an evolutionary theory

technological extinctions of industrial firms an inquiry into their nature and causes after a buildup in the number of firms new industries commonly experience a shakeout in which the number of firms declines sharply three theoretical perspectives on how technological change contributes to industry shakeouts are analyzed the theories are used to synthesize predictions concerning technological change and industry evolution the predictions inform an analysis of four us industries that experienced sharp shakeouts automobiles tires televisions and penicillin using data on firm participation and innovation from the commercial inception of the four products through their formative eras we uncover regularities in how the products evolved the regularities suggest that shakeouts are not triggered by particular technological innovations nor by dominant designs but by an evolutionary process in which technological innovation contributes to a mounting dominance by some early entering firms copyright 1997 by oxford university press

nonparametric identification of risk aversion in first price auctions under exclusion restrictions this paper studies the nonparametric identification of the first price auction model with risk averse bidders within the private value paradigm first we show that the benchmark model is nonindentified from observed bids we also derive the restrictions imposed by the model on observables and show that these restrictions are weak second we establish the nonparametric identification of the bidders utility function under exclusion restrictions our primary exclusion restriction takes the form of an exogenous bidders participation leading to a latent distribution of private values that is independent of the number of bidders the key idea is to exploit the property that the bid distribution varies with the number of bidders while the private value distribution does not we then extend these results to endogenous bidders participation when the exclusion restriction takes the form of instruments that do not affect the bidders private value distribution though derived for a benchmark model our results extend to more general cases such as a binding reserve price affiliated private values and asymmetric bidders last possible estimation methods are proposed

a review of learning rates for electricity supply technologies a variety of mathematical models have been proposed to characterize and quantify the dependency of electricity supply technology costs on various drivers of technological change the most prevalent model form called a learning curve or experience curve is a log linear equation relating the unit cost of a technology to its cumulative installed capacity or electricity generated this one factor model is also the most common method used to represent endogenous technical change in large scale energy economic models that inform energy planning and policy analysis a characteristic parameter is the learning rate defined as the fractional reduction in cost for each doubling of cumulative production or capacity in this paper a literature review of the learning rates reported for 11 power generation technologies employing an array of fossil fuels nuclear and renewable energy sources is presented the review also includes multi factor models proposed for some energy technologies especially two factor models relating cost to cumulative expenditures for research and development r d as well as the cumulative installed capacity or electricity production of a technology for all technologies studied we found substantial variability as much as an order of magnitude in reported learning rates across different studies such variability is not readily explained by systematic differences in the time intervals geographic regions choice of independent variable or other parameters of each study this uncertainty in learning rates together with other limitations of current learning curve formulations suggests the need for much more careful and systematic examination of the influence of how different factors and assumptions affect policy relevant outcomes related to the future choice and cost of electricity supply and other energy technologies

estimating a war of attrition the case of the us movie theater industry this paper estimates the impact of competition and exogenous demand decline on the exit process of movie theaters in the us from 1950 1965 i modify fudenberg and tirole 1986 s model of exit in a duopoly with incomplete information to an oligopoly i estimate this model with panel data using variations in tv diusion across house holds and other market characteristics to identify the parameters in the theater s payo function and the distribution of unobservable exit values using the estimated model i show that theaters who are making negative pro ts may choose to remain in the market if they expect to outlast their competitors because at that point their pro ts would increase this creates a signi cant delay in the exit process in addition by decompos ing the across market variation in the exit process i nd that tv diusion explains a substantial proportion of the variation in the exit process

econometrics of first price auctions in this paper we propose an estimation method for the empirical study of theoretical auction models we focus on first price sealed bid and descending auctions and we adopt the private value paradigm where each bidder is assumed to have a different private value only known to him for the object that is auctioned following mcfadden 1989 and pakes and pollard 1989 our proposed method is based on simulations specifically the method relies on a simulated nonlinear least squares objective function appropriately adjusted so as to obtain consistent estimates of the parameters of interest we illustrate the proposed method by studying a market of agricultural products where descending auctions are used our analysis takes into account heterogeneity of the auctioned objects and the fact that only the winning bid is observed we estimate the parameters that characterize the distribution of the unobserved private values for each auctioned object

equilibrium in sealed high bid auctions there is a voluminous theoretical literature on sealed high bid auctions auctions in which bids are sealed and the high bidder pays his bid see for example vickrey 1961 myerson 1981 riley and samuelson 1981 milgrom and weber 1982 matthews 1983 maskin and riley 1984 holt 1980 cox smith and walker 1988 a critical property on which this literature relies is the existence of equilibrium in which buyers bidding strategies are monotonic in their types this enables the analyst to perform comparative statics as the distribution of types changes and to compare the welfare properties of the high bid auction with those of other auction institutions one case in which the existence of monotonic equilibrium is readily established is that in which buyers types are distributed smoothly independently and symmetrically in this case there exists a symmetric equilibrium one in which all bidders share the same bidding behaviour as a function of their valuations and this bid function is the solution to a first order differential equation

anniversary article the strategy field from the perspective of management science divergent strands and possible integration we reflect on the evolution of the strategy field as seen through the window ofmanagement science reflecting the diverse disciplinary roots of strategy research we identify a broad ranging body of work that varies with respect to the assumptions made regarding individual rationality and the level of analysis at which the research is carried out we argue that recent developments begin to delineate a potentially unifying conceptual framework for treating the field s defining questions the conceptual apparatus of evolutionary economics we conclude by laying out important challenges for evolutionary economics if it is to serve as a foundation for both the positive and the normative research agendas of the strategy field

an empirical model of firm entry with endogenous product type choices i describe a model of entry with endogenous product type choices these choices are formalized as the outcomes of a game of incomplete information in which rivals differentiated products have nonuniform competitive effects on profits i estimate the model for location choices in the video retail industry using a nested fixed point algorithm solution the results imply significant returns to product differentiation simulations illustrate the tradeoff between demand and intensified competition and the extent to which markets with more scope for differentiation support greater entry

the making of an oligopoly firm survival and technological change in the evolution of the u s tire industry the number of producers in the u s tire industry grew for 25 years and then declined sharply and the industry evolved to be an oligopoly the role of technological change in shaping the industry s market structure is explored a model of industry evolution featuring technological change is used to derive predictions that are tested using a novel data set on firm entry exit size location distribution networks and technological choices prior to the shakeout of producers consistent with the model earlier entering and larger firms survived longer principally because of the influence of age and size on technological change

equilibria in open common value auctions abstract a sufficient condition for uniqueness of nash equilibrium in second price common value auctions is identified we establish that there exists a continuum of equilibria in irrevocable exit common value auctions for the case of two bidders we provide plausible sufficient conditions under which the expected seller revenue is maximized at the symmetric equilibrium an example in which the auctioneer s revenue at the symmetric equilibrium in a second price auction is strictly greater than the revenue at many asymmetric equilibria in the corresponding irrevocable exit auction is provided

estimating risk aversion from ascending and sealed bid auctions the case of timber auction data estimating bidders risk aversion in auctions is a challeging problem because of identification issues this paper takes advantage of bidding data from two auction designs to identify nonparametrically the bidders utility function within a private value framework in particular ascending auction data allow us to recover the latent distribution of private values while first price sealed bid auction data allow us to recover the bidders utility function this leads to a nonparametric estimator an application to the us forest service timber auctions is proposed estimated utility functions display concavity which can be partly captured by constant relative risk aversion

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

integrated quantile based estimation for first price auction models this article considers nonparametric estimation of first price auction models under the monotonicity restriction on the bidding strategy based on an integrated quantile representation of the first

semiparametric estimation of first price auctions with risk averse bidders in view of the non identification of the first price auction model with risk averse bidders this paper proposes some parametric identifying restrictions and a semiparametric estimator for the risk aversion parameter s and the latent distribution of private values specifically we exploit heterogeneity across auctioned objects to establish semiparametric identification under a conditional quantile restriction of the bidders private value distribution and a parameterization of the bidders utility function we develop a multistep semiparametric method and we show that our semiparametric estimator of the utility function parameter s converges at the optimal rate which is slower than the parametric one but independent of the dimension of the exogenous variables thereby avoiding the curse of dimensionality we then consider various extensions including a binding reserve price affiliation among private values and asymmetric bidders the method is illustrated on u s forest service timber sales and bidders risk neutrality is rejected

using all bids in parametric estimation of first price auctions abstract recently laffont et al 1995 have proposed an snlls estimator using winning bids only here we derive a relationship between the means of observed bids and private values to propose an snlls estimator using all bids in first price auctions

explaining the shakeout process a successive submarkets model this paper explains contemporaneous exit and entry in a new industry with a diffusion process across submarkets it allows a re interpretation of the shakeout process in some industries in a novel way the industry is a collection of initially inactive independent submarkets the timing of their activation is determined by an exogenous aggregate diffusion process new submarket opening attracts new entry however the post entry endogenous sunk investment requirement induced by innovations also forces much exit to follow entry the aggregate market thus has overlapping exit and entry and has a shakeout if the aggregate diffusion process follows a typical s shape

auctioning and bargaining an econometric study of timber auctions with secret reservation prices this article considers a first price sealed bid auction at which the seller s reservation price is not announced in advance we allow for a second round of bargaining and consider the nash bargaining outcome when the object is unsold after the auctioning round we characterize the bidders and seller s bayesian nash equilibrium strategies the distributions of the buyers and seller s private values are estimated by nonlinear least squares from auction data on standing timber while solving numerically the differential equations characterizing the seller s and buyers equilibrium strategies the performance of the estimated model is then compared to a model in which the players behave myopically

how bidder s number affects optimal reserve price in first price auctions under risk aversion this paper shows that in the classic symmetric and independent private value environments the seller s optimal reserve price is a decreasing function of the number of bidders in the first price auctions when the seller and or buyers are risk averse

auctions with resale markets an application to u s forest service timber sales when bidders anticipate an opportunity for resale trade the value of winning an auction is determined in part by the option values of buying and selling in the secondary market one implication is that a bidder s willingness to pay at an auction increases with the expected level of competition between resale buyers empirical evidence from auctions of timber contracts supports this prediction and rejects standard models that ignore resale the estimated effect is smaller after policy changes expected to diminish the prevalence of resale additional evidence supports the predicted presence of a common value element introduced by the resale opportunity

market structure and multiple equilibria in airline markets we provide a practical method to estimate the payoff functions of players in complete information static discrete games with respect to the empirical literature on entry games originated by bresnahan and reiss 1990 and berry 1992 the main novelty of our framework is to allow for general forms of heterogeneity across players without making equilibrium selection assumptions we allow the effects that the entry of each individual airline has on the profits of its competitors its competitive effects to differ across airlines the identified features of the model are sets of parameters partial identification such that the choice probabilities predicted by the econometric model are consistent with the empirical choice probabilities estimated from the data we apply this methodology to investigate the empirical importance of firm heterogeneity as a determinant of market structure in the u s airline industry we find evidence of heterogeneity across airlines in their profit functions the competitive effects of large airlines american delta united are different from those of low cost carriers and southwest also the competitive effect of an airline is increasing in its airport presence which is an important measure of observable heterogeneity in the airline industry then we develop a policy experiment to estimate the effect of repealing the wright amendment on competition in markets out of the dallas airports we find that repealing thewright amendment would increase the number of markets served out of dallas love

identification of standard auction models this paper presents new identification results for models of first price second price ascending english and descending dutch auctions we consider a general specification of the latent demand and information structure nesting both private values and common values models and allowing correlated types as well as ex ante asymmetry we address identification of a series of nested models and derive testable restrictions enabling discrimination between models on the basis of observed data the simplest model symmetric independent private values is nonparametrically identified even if only the transaction price from each auction is observed for richer models identification and testable restrictions may be obtained when additional information of one or more of the following types is available i the identity of the winning bidder or other bidders ii one or more bids in addition to the transaction price iii exogenous variation in the number of bidders iv bidder specific covariates while many private values pv models are nonparametrically identified and testable with commonly available data identification of common values cv models requires stringent assumptions nonetheless the pv model can be tested against the cv alternative even when neither model is identified

the life cycle of a competitive industry firm numbers first rise then later fall as an industry evolves this nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit equilibrium time paths for price and quantity also share features of the data the model is estimated using data from the u s automobile tire industry a particularly dramatic example of the nonmonotonicity in firm numbers

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

on the existence of pure and mixed strategy nash equilibria in discontinuous games a game is better reply secure if for every nonequilibrium strategy x and every payoff vector limit u resulting from strategies approaching x some player i has a strategy yielding a payoff strictly above u i even if the others deviate slightly from x if strategy spaces are compact and convex payoffs are quasiconcave in the owner s strategy and the game is better reply secure then a pure strategy nash equilibrium exists better reply security holds in many economic games it also permits new results on the existence of symmetric and mixed strategy nash equilibria

steven klepper recipient of the 2011 global award for entrepreneurship research this article reviews the academic contributions of the 2011 receiver of the global award for entrepreneurship research professor steven klepper carnegie mellon university the global award consists of 100 000 euro and a statuette of the internationally renowned swedish sculpture carl milles klepper has made breakthrough analyses in the realm of industrial dynamics emphasizing the regularities in the time paths of entry of new producers exit of incumbent firms spin offs and innovation his work is predominantly empirical but he has also played an essential role in developing more rigorous theoretical models of phenomena such as spin offs of particular importance is how klepper has managed to link traditional neoclassical models with evolutionary theory as well as entrepreneurship research with mainstream economics

bargaining over new ideas the distribution of rents and the stability of innovative firms we develop a theory of the rent distribution and stability of innovative firms our theory is based on a model of bargaining over new ideas the model accounts for the problem of information leakage namely the diffusion of information about new ideas among the agents that participate in the bargaining our main results draw a link between the strength of intellectual property rights enforcement and the distribution of rents in firms as well as between the size and organization of firms and their stability our theory explains why small firms are advantaged in introducing innovation into the market and why spin outs tend to emerge from large established firms jel l1 l2 c7

a dynamic model of entry and exit in a growing industry the potential demand in a new industry evolves over time demand is initially low but advertising by the industry s early entrants can speed up demand growth however there is intrinsic uncertainty of the demand level in each period and uncertainty of the demand evolution path which can be affected by the underlying economic environment we construct a dynamic model that features the stochastically and endogenously expanding demand of a new industry and we investigate the optimal entry and exit behavior of firms as the industry evolves we find that firms incentive to enter early depends critically on the cost that early entrants have to pay in developing the market when the cost is high and the benefit spills over to potential entrants firms have an incentive to wait and the probability of entry can increase with the number of incumbents under certain circumstances firms entry strategy is also influenced by the transition of economic states firms are more likely to enter under a state that shows the prospect of demand taking off soon we also find that in the early stage of an industry higher demand uncertainty can induce faster entry

the role of investment efficiency in the industry life cycle this article studies a dynamic model of an industry life cycle based on increasing returns in the cost of growth whereby large firms can grow more easily when there are strong increasing returns in the adjustment cost function the model exhibits multiple rest points and firms do not necessarily all end up in the same state the model generates typical life cycle stages including a shakeout the likelihood of survival is positively correlated with the entering size an implication that fits empirical findings that exiting firms are small not only just prior to exit but also at the time of entry the model also explains newer findings on the evolution of moments an increase in the skewness and the spread of firm size distribution before the shakeout and a decline in these with the start of the shakeout copyright 2010 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

consolidation by merger the uk beer market this paper examines the determinants of market structure in the uk brewing industry over 1949 1969 sutton sunk costs and market structure price competition advertising and the evolution of concentration 1991 points to technology and advertising races as two key drivers of market concentration this study uses an own built longitudinal data set of the population of firms and breweries and reveals the importance of institutional factors in explaining the dynamics of market structure the practice of tying outlets to brewers and legal restrictions on opening retail outlets together with a permissive policy towards mergers made acquisition of medium sized firms and brewery closure shortly after acquisition the main driving mechanism towards industry consolidation during this period the number of firms and plants fell sharply by 74 and 60 respectively and production rose by about 25 with no firm entry and just one new brewery opening as a result concentration increased and the market transformed from a highly fragmented one into a stable oligopoly

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices