mergers and business model assimilation evidence from low cost airline takeovers this paper examines mergers that lead to an almost immediate replacement of the target firm s business model in favour of that of the acquiring firm we examine the post merger behaviour of the two leading european dedicated low cost airlines easyjet and ryanair each acquiring another low cost airline respectively go fly and buzz we find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of inter temporal price discrimination used on the acquired routes with early booking fares noticeably reduced and only very late booking fares increased overall the analysis points to a pro competitive effect of both takeovers as a consequence of the introduction of the acquiring firms business models and associated yield management pricing systems

the environmental economic impact of woodland a two stage hedonic price model of the amenity value of forestry in britain woodland is an important part of the environment providing economic benefits through its use in commercial timber production and through its value as an amenity as well as providing recreation for visitors woodland is also important to local residents for whom it provides leisure opportunities and a source of aesthetic enjoyment it is well known that the price of a house may reflect a household s willingness to pay to live near an environmental amenity such as a forest and to gain access to it the nature of this relationship may be examined by applying the hedonic price technique an econometric method which investigates house prices and the variation in structural and environment characteristics over space this study uses a two stage hedonic price model to explore the impact of forest type on house price and to estimate the demand for broadleaved woodland for a sample of houses adjacent to forestry commission land

measuring the unmeasurable a country s non r d expenditure on product and service innovation knowledge about non r d innovation expenditure such as patenting and licensing design trial production tooling up manpower training market research and investment in fixed assets is extremely sparse and questions about the latter were very poorly answered in the recent community innovation survey cis using information regarding the quality of replies we reach a tentative national estimate of 1992 innovation expenditure for all manufacturing and service industries in the netherlands expenditure on product related r d represents about one quarter of total product and service innovation expenditure roughly half of the latter consists of investment in fixed assets the latter being more important in services than in manufacturing

do stronger intellectual property rights increase innovation summary do stronger intellectual property rights ipr increase innovation recent decades have seen a global transformation in ipr standards underpinned by the theory that stronger iprs spur increased incentives to innovate this study tests the impact of ever more rigorous ipr systems on innovation through an index of economic complexity of 94 countries from 1965 to 2005 our results confirm that stronger intellectual property systems engender higher levels of economic complexity nevertheless only countries with an initial above average level of development and complexity enjoy this effect

economies of traffic density in the deregulated airline industry this article estimates a structural model of competition among hub and spoke airlines in order to measure the strength of economies of traffic density on individual route segments we find that economies of density were strong during the sample period fourth quarter 1985 stronger than previous estimates by douglas caves laurits christensen and michael tretheway derived from traditional cost function methods we also find that the airlines competitive behavior was far from collusive in the markets under study markets requiring a connection at a hub airport our structural model also provides plausible estimates of demand elasticities we use our estimates to provide a cost based rationale for the major changes in the structure of the industry following deregulation for example the increase in airport and industry wide concentration and the increase in competition at the city pair market level and to simulate the effects of a merger of airlines that share a hub

patent length and the rate of innovation this paper models the effect of patent length on the rate of innovation and consumer welfare the authors find that the patent length that maximizes the rate of innovation exceeds that which maximizes consumer welfare they show a countervailing effect of patent length upon the size and frequency of innovation longer patents increase the size but decrease the frequency of innovation the patent lengths that maximize the rate of innovation and welfare represent balance points between size and frequency the divergence of the welfare maximizing and rate of innovation maximizing patent lengths has important policy implications that the authors briefly explore copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

airport presence as product differentiation there is now widespread recognition that an airline s operation at a given airport greatly affects its competitive position on routes flown out of that airport see m levine 1987 s borenstein 1989 s morrison and c winston 1989 and myself 1989 among many others airlines typically defend any competitive advantage as stemming from the lower costs and better service that are said to be generated by hub and spoke route systems airline critics typically respond that airlines gain market power by dominating individual airports both views are at least plausible huband spoke transportation networks reduce the number of round trips necessary to carry a given number of passengers on a given set of itineraries while increasing the number of passenger miles flown if there are sufficient economies of scale in plane size then the advantages of hubbing can overcome the disadvantage in passenger miles resulting in lower total costs by pooling passengers with different ultimate destinations a hubbed system can also offer more frequent flights than would be economically feasible under a nonstop system it also appears however that airlines gain other advantages from a large presence at an airport incumbent airlines are the major source of financing for many airports and therefore gain a large degree of bureaucratic control over airport operations this control may enable them to block the entry or expansion of rivals airlines with a large presence in a given city also gain advantages from frequent flyer plans and nonlinear travel agent commission schedules see again levine and others if the bureaucratic and marketing advantages of airport presence are sufficient to prevent most attempts at entry then incumbents may gain the ability to exercise traditional market power by restricting output and driving up prices this paper argues that both simple costreducing and naive market power stories are inappropriate for the airline industry i present a model in which consumers are willing to pay a premium for the services of the dominant airline this premium may be related to a number of factors including flight frequency frequent flier miles and travel agent commission overrides this model has the advantage of treating oligopoly product differentiation in an explicit way of treating price as an endogenous variable and of allowing for airport presence to affect both costs and demand

threshold effects in the patent growth relationship a pstr approach for 60 developed and developing countries this study analyzes whether there is a threshold effect in the innovation growth relationship using data from the period 2008 2017 we perform an analysis using 60 countries in the whole sample an

a micro analysis of business travel demand this study tests two hypothesis 1 that tax deductibility and the dual benefit nature of goods on the business pleasure borderline increases the demand for business travel and 2 that this dual benefit decreases price elasticity the study uses expenditure microdata and contrasts the behaviour of business travellers and pleasure travellers both groups are assumed to have indentical tastes but the expenditure behaviour of business travellers is modified by the role of the business trip as a factor of production the linear expenditure system les allocation model is applied to expenditures on individual goods at a particular tourist destination business travellers are shown to have higher expenditures than pleasure travellers for food lodging and local transportation minimum quantities estimated by the les are also higher for business travellers uncompensated price elasticities of business travellers are significantly smaller than that of pleasure travellers for local transportation clothing a

does competition reduce price dispersion new evidence from the airline industry we analyze the effects of competition on price dispersion in the airline industry using panel data from 1993 q1 through 2006 q3 competition has a negative effect on price dispersion in line with the textbook treatment of price discrimination this effect is pronounced for routes with consumers characterized by relatively heterogeneous elasticities of demand on routes with a homogeneous customer base the effects of competition on price dispersion are smaller our results contrast with those of borenstein and rose who found that price dispersion increases with competition we reconcile the different results by showing that the cross sectional estimator suffers from omitted variable bias

corporate campaign contributions repeat giving and the rewards to legislator reputation abstract are politicians who follow a strategy of reputational development rewarded with high levels of corporate campaign contributions reputational clarity could help to reduce uncertainty about a candidate and lead to greater campaign contributions from favored interests alternatively such clarity could alienate those who disagree and prevent the politician from obtaining contributions from groups on both sides of an issue we outline an approach that considers conditions under which a politician would or would not prefer reputational development and policy stance clarity and consistency in the context of repeat dealing with special interests our proxy for reputational development is the percentage of repeat givers to a legislator using data on corporate political action committee pac contributions to members of the u s house during the seven electoral cycles from 1983 84 to 1995 96 we explore a variety of alternative hypotheses and find that greater reputational development is rewarded with g

poverty inequality and welfare this paper argues that in order to produce a coherent account of pov erty that makes it more than just a facet of inequality it is essent ial to capture at the individual level those factors that a k sen p townsend and others have argued to be important in generating po verty it is shown that having done this it is possible to produce me asures of poverty and inequality that are clearly and systematically related to each other and to the overall level of welfare but in whi ch poverty emerges as more than just a facet of a wider and more gene ral concern with inequality copyright 1987 by royal economic society

localized market power in the u s airline industry this paper tests whether the observed dominance of most city pair markets and airports in the u s domestic airline industry by single carriers confers any pricing power on the dominan t firms the results of fixed effects estimation indicate that airport dominance by a carrier does confer upon it substantial pricing power whereas dominance at the route level seems to confer no such pricing power additionally the authors find a positive yet small correlation between both route concentration and price and airport concentration and price the quantitative importance of airport dominance reveals that the most promising direction for public polic y aimed at improving the industry s performance is to ensure equal acc ess to sunk airport facilities copyright 1993 by mit press

the impact of mergers on fares structure evidence from european low cost airlines this paper examines mergers that lead to an almost immediate replacement of the target firm s business model in favor of that of the acquiring firm we examine the post merger behavior of the two leading european dedicated low cost airlines easyjet and ryanair each acquiring another low cost airline go fly and buzz respectively we find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of intertemporal price schedules used on the acquired routes with early booking fares noticeably reduced and only very late booking fares increased the analysis suggests that the takeovers had a net beneficial effect for consumers at least in price terms as a consequence of the introduction of the acquiring firms business models and associated yield management pricing systems

spatial multiproduct pricing empirical evidence on intra european duopoly airline markets this paper estimates a model of spatial multiproduct duopoly pricing when the location patterns differ across markets the theoretical model suggests that the neighbouring configuration yields less competitive nash prices than the interlaced configuration i apply this model to data for intra european duopoly airline markets the empirical results support the theoretical model since i find that fares are higher on intra european markets that exhibit neighbouring configurations in the time domain this result suggests that price competition is reduced when each airline operates on a specific segment of the timetable e g the first 12 hours of the day clearly this result has several implications for policy makers and or airport authorities in charge of awarding slots

the evolution of u s airline competition studies by academic economists were a significant force in the movement towards deregulation of the domestic airline industry in the early 1970s levine 1965 jordan 1970 keeler 1972 douglas and miller 1974 during the critical 1977 78 period in which deregulation was imposed first de facto by the civil aeronautics board cab and then de jure by congress the chairman and vice chairman of the cab were economists for the 14 years since deregulation economists have continued intensive study of the industry in part because of the unusual availability of reliable firm and transaction level data and in part because of the rare opportunity to observe an industry as it evolves from strict economic regulation to fairly unimpeded competition and strategic behavior the simplest prediction of economists about airline deregulation and one of the few on which nearly all economists agreed was that deregulation would improve consumer welfare in comparison to continued price and entry regulation fourteen years later nearly all economists still agree on this though the degree of enthusiasm for the deregulation outcome varies considerably there was substantial disagreement among economists about the market structure that would result because studies of scale economies in the airline industry had concluded that none existed beyond the scale of the smaller major airlines of the 1970s caves 1962 eads et al 1969 many economists argued that deregulation would result in more than the 11 major airlines that existed at the time of deregulation others predicted that only a few or possibly only one airline would survive at a large scale two noted university of chicago economists sam peltzman and lester telser made a bet in 1979 on whether

air travel choices in multi airport markets abstract we study how air travel consumers departing from a multi airport region trade off across airport and airline supply characteristics we empirically investigate this trade off by estimating a weighted conditional logit model of airport airline choice using survey data on travels departing from one of three san francisco bay area airports and arriving at one of four airports in greater los angeles in october 1995 non price characteristics like airport access time airport delay flight frequency the availability of particular airport airline combinations and early arrival times are found to strongly affect choice probabilities we calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type in order to examine the robustness of the conditional logit model we estimate a mixed logit model and find that the results are similar we attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers thus controlling for two important sources of consumer heterogeneity we consider the implications of our empirical findings on vertical integration between airlines and airports on the effectiveness of airport dominance and on the competitive effect of entry by low cost carriers

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

the relative effectiveness of patents and secrecy for appropriation abstract changes in patent law global competition and the rise of several new technologies suggest that patents could be of greater value than secrecy for many innovative firms particularly small firms that are unable to use market power or other factors to appropriate their investments in innovation data from the 1993 european community innovation survey cis for up to 2849 r d performing firms is analysed to determine the relative importance of secrecy vs patents this particular combination of appropriation methods is interesting because secrecy can act as a mutually exclusive alternative to patents the results show that a higher percentage of firms in all size classes rate secrecy as more valuable than patents however ordered logit regressions show that the probability that a firm rates secrecy as more valuable than patents declines with an increase in firm size for product innovations while there is no relationship for process innovations the firm s r d intensity has no effect on the relative value of secrecy vs patents there is weak evidence to show that participation in cooperative r d increases the value of patents over secrecy for product innovations the results are relevant to ongoing debates over changes to the patent system and the need for policies to encourage small firms to patent more

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

airline pricing behavior under limited inter modal competition this paper empirically analyzes airline pricing for short haul flights in contexts with no credible threat of inter modal competition to this end we explore the southern italian market since it is less accessible by other transport modes and thus fares are the direct outcome of air related competition we show in fact that market power matters depending on the level of intra modal competition and that airlines apply differentiated mark ups besides consistent with the implementation of inter temporal price discrimination ipd we find a non monotonic inter temporal profile of fares with a turning point included in the interval of the 43rd to 45th days before departure finally we provide evidence that in more competitive markets airlines are more likely to engage in ipd jel l11 l13 l93

concentration potential entry and performance in the airline industry airline markets do not satisfy the theoretical conditions for perfect contestability and theory does not indicate which deviations from perfect contestibilty significantly affect performance thus the effect of potential entry on performance in airline markets is explored empirically the best model for explaining fares is found to be one in which the measure of market concentration takes into account not only the number and size distribution of incumbents but also the number of potential entrants not significantly disadvantaged due to economies of scale and scope the hypothesis that all city pair markets are perfectly contestable is rejected coauthors are richard l johnson andrew s joskow gregory j werden and michael a williams copyright 1989 by blackwell publishing ltd

intellectual property protection and antitrust in the developing world crisis coercion and choice after the economic crisis of the early 1980s developing countries adopted new policies regarding intellectual property protection only as a result of a coercive u s strategy consistent with a neorealist explanation based on power targeted countries have complied only on paper not in practice however in contrast hegemonic powers have not employed overt coercion in the area of antitrust policy consistent with interpretivist neoliberalism which emphasizes learning and voluntarism a nuanced analysis of power and ideas is necessary to account for the differences between the cases the different mechanisms through which the new policies have been adopted suggest different prospects for these new policies

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

potential competition in the deregulated airlines using a new and unique data set this paper applies a systems approach to the study of potential competition prices and entry relations in airline city pair markets consistent with limit pricing models future entry is directly influenced by current prices current prices thus appear to provide an important signal to potential entrants about the probability of profitable entry while results indicate the existence of barriers to entry these barriers appear to have no independent effects on price beyond there effect on actual competition through increases in concentration copyright 1990 by mit press

latin america s social policy challenge education social insurance redistribution abstract long regarded as a region beset by macroeconomic instability high inflation and excessive poverty and inequality latin america has undergone a major transformation over the last 20 years the region has seen improved macroeconomic management and substantial and sustained reductions in poverty and inequality in this paper we argue that social policy including human capital and education social insurance and redistribution need special attention if achievements of the last two decades are to be sustained and amplified starting in the mid 1990s many governments in the region introduced a variety of programs including noncontributory pensions and health insurance and cash transfers targeted to the poor social spending in latin america increased sharply these policies have been widely praised and we believe they have resulted in substantial improvements in the lives of the poor in the region however a more nuanced view shows some worrisome trends moving forward we believe it is nec

international patent protection 1960 2005 abstract this note provides an update to the index of patent protection published in this journal in 1997 the original paper presented the index for 1960 1990 for 110 countries the index has now been updated to 2005 and extended to 122 countries the adoption of stronger patent laws and the composition of patent rights vary across countries by level of economic development

productivity growth and some of its determinants in the deregulated u s railroad industry this study analyzes the effects of an important postderegulation innovation on rail freight productivity the elimination of cabooses and related crew members it also analyzes the overall growth of productivity in rail freight between 1983 and 1997 using a translog rail cost function estimated over a sample of class i railroads between 1983 and 1997 the results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5 8 on the typical class i railroad in 1997 equivalent to an annual cost saving of 2 billion to 3 3 billion for all class i railroads moreover if class i railroads had no other technological advances since 1983 their 1997 costs with 1997 factor prices would have been 36 43 higher than they in fact were finally the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997 if anything it accelerated slightly

the effect of air traffic delays on airline prices abstract a legislative change in takeoff and landing restrictions at laguardia airport provides an opportunity to study the effect of an exogenous shock to product quality on prices in the airline industry i test how the price response varies with the degree of competition in the market i find that prices fall by 1 42 on average for each additional minute of flight delay and that the price response is substantially larger in more competitive markets

domestic airline alliances and consumer welfare this article investigates the consumer welfare consequences of the recent code share agreement between continental airlines and northwest airlines we develop a discrete choice model based on individual flight characteristics this structural model recognizes that consumers i may have heterogeneous preferences for flight attributes and ii may face different prices for the same flight the empirical methodology also deals with the measurement error problem stemming from the absence of consumer level data on prices the estimation results suggest that whereas the code share agreement did not impact consumers significantly on average it increased the average surplus of connecting passengers but decreased the average surplus of nonstop passengers interestingly the magnitude of our welfare results may be attributed in large part to changes in product characteristics other than prices

the ubiquity of room taxes abstract this article examines the case for the imposition of room taxes and attempts to explain their ubiquity the room tax is analysed using the main criteria for assessing taxes and is compared to property tax the extent of room tax imposition is surveyed and the possibilities of evasion are discussed

what is behind the recent surge in patenting abstract we investigate the cause of an unprecedented surge of us patenting over the past decade conventional wisdom points to the establishment of the court of appeals of the federal circuit by congress in 1982 we examine whether this institutional change which has benefited patent holders explains the burst in us patenting using both international and domestic data on patent applications and awards we conclude that the evidence is not favorable to the conventional view instead it appears that the jump in patenting reflects an increase in us innovation spurred by changes in the management of research

tourism and economic development a survey this article surveys the literature on tourism and economic development identifying the contribution that tourism can make to development including foreign currency income and employment and the costs that it entails single equation and system of equations models for estimating tourism demand are provided indicating developing countries potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness the main sectors of tourism supply transportation tour operators travel agents and accommodation are examined and the importance of cross country integration between firms is highlighted the article argues that many of the problems associated with the use of environmental resources for tourism stem from market failure and it considers methods for increasing sustainably the returns from them

motives to patent empirical evidence from germany abstract against the background of the patent upsurge we first analyse the role of patenting and alternative instruments to protect intellectual property based on a sample of german companies active in patenting in a second step we investigate the motives to patent considering sector and company size effects we find that company size matters both for the importance of instruments and the motives to patent especially important are the new strategic motives to patent like using patents to improve a company s own position in negotiations with partners licensees and the financial sector or to use patents as incentives for r d personnel or performance indicators these correlate positively with company size we derive some possible challenges for future patent policies from these insights

the future of market regulation market regulation is accomplished both by competition and by external government agencies and the trend is toward greater reliance on competition economists have fostered this trend and have even invented markets to help overcome some externality problems they have contributed to a steady improvement in antitrust policy which currently reflects economic knowledge well they diagnosed and demonstrated problems with external regulation of the airline industry and gave assurance that regulation by competition could work in its place success there led not only to deregulation of airlines but also deregulation of railroads trucks buses and in some ways natural gas pipelines two other industries telecommunications and electricity are now following very ambitious paths toward less external regulation and greater dependence on competition the internet raises new issues but there also competition will play an important regulatory role

firm size inequality and market power abstract in this paper we reexamine the relationship between firm size inequality fsi and market power in light of modern oligopoly theory using a model with capacity constraints and endogenous conduct we show that the market power fsi relationship is more complex than the positive link traditionally predicted we show that two separate effects are at work leading to a u shaped relationship between market power and fsi we also show that prices should be more unstable in markets where fsi is high we test these predictions on data for the u s airline industry and find results that support them

how do incumbents respond to the threat of entry evidence from the major airlines this paper examines how incumbents respond to the threat of entry of competitors as distinguished from their response to competitors actual entry it uses a case study from the passenger airline industry specifically the evolution of southwest airlines route network to identify particular routes where the probability of future entry rises abruptly when southwest begins operating in airports on both sides of a route but not the route itself this dramatically raises the chance they will start flying that route in the near future we examine the pricing of the incumbents on threatened routes in the period surrounding such events we find that incumbents cut fares significantly when threatened by southwest s entry into their routes this is true even after controlling in several ways for airport specific operating costs the response of incumbents seems to be limited only to the threatened route itself and not to routes out of nearby competitor airports where southwest does not operate e g fares drop on routes from chicago midway but not chicago o hare the largest responses appear to be restricted to routes that were concentrated beforehand incumbents do experience short run increases in their passenger loads concurrent with these fare cuts this is consistent with theories implying incumbents will try to generate some longer term loyalty among current customers before the entry of a new competitor we examine evidence relating this demand building motive to frequent flyer programs and find suggestive evidence in favor of this notion there is only weak evidence that incumbents increase capacity on the routes

a note on the bourguignon fields class of poverty indices abstract current poverty measurement methodology does not allow a definitive analysis of changes in distribution through time or between countries which involve changes in the number or proportion of poor people by revisiting the continuity and transfer axioms we show that within the bourguignon and fields 1997 class of poverty indices a range of value judgements can be accommodated as to what happens or should happen in the case that poverty line crossings result from regressive transfers in exposing this we hope to provide empirical analysts with wider scope to use the bourguignon fields poverty indices in an informed way

the patent paradox revisited an empirical study of patenting in the u s semiconductor industry 1979 1995 we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms

appropriate intellectual property protection and economic growth in countries at different levels of development this paper examines how the role of patents and utility models in innovation and economic growth varies by level of economic development using a panel dataset of over 70 countries we find that patent protection is an important determinant of innovation and that patentable innovations contribute to economic growth in developed countries but not in developing instead in developing economies a minor form of intellectual property rights iprs namely utility models is conducive to innovation and growth controlling for other factors using korean firm level data as a case study we find that utility model innovations contribute to firm performance when firms are technologically lagging and that those minor innovations can be a learning device and thus a stepping stone for developing more patentable inventions later on upon reaching higher levels of technological capabilities firms become more reliant upon patents and less on utility models thus the lesson here is that patent protection enhances innovation and economic growth in countries where the capacity to conduct innovative research exists where this capacity is weaker a system that provides incentives to conduct minor incremental inventions is more conducive to growth the significance of this paper is to emphasize the importance not just of the strength of iprs but of the appropriate type of iprs for economic development

the national system of innovation in historical perspective contrary to some recent work on so called globalisation this paper argues that national and regional systems of innovation remain an essential domain of economic analysis their importance derives from the networks of relationships which are necessary for any firm to innovate whilst external international connections are certainly of growing importance the influence of the national education system industrial relations technical and scientific institutions government policies cul tural traditions and many other national institutions is fundamental the historical examples of germany japan and the former ussr illustrate this point as well as the more recent contrast between east asian and latin american countries introduction the national system of friedrich list according to this author s recollections the first person to use the expression national system of innovation was bengt ake lundvall and he is also the editor of a highly original and thought provoking book 1992 on this subject however as he and his colleagues would be the first to agree and as lundvall himself points out the idea actually goes back at least to friedrich list s conception of the national system of political economy 1841 which might just as well have been called the national system of innovation the main concern of list was with the problem of germany overtaking england and for underdeveloped countries as germany then was in relation to england he advocated not only protection of infant industries but a broad range of policies designed to accelerate or to make possible industrialisation and economic growth most of these policies were concerned with learning about new technology and applying it the racialist and colonialist overtones of the book were in strong contrast to the inter nationalist cosmopolitan approach of the classical free trade economists and list s belief that holland and denmark should join the german bund and acquire german nationality because of their descent and whole character reads somewhat strangely in the european community of today nevertheless despite these unattractive features of his outlook he clearly anticipated many contemporary theories after reviewing the changing ideas of economists about development in the years since the second world war the world bank 1991 concludes that it is intangible investment in knowledge accumulation which is decisive rather than physical capital investment as was at one time believed pages 33 35 the report cites the new growth theory

the impact of regulatory governance and privatization on electricity industry generation capacity in developing economies this article assesses whether a regulatory law and higher quality regulatory governance are associated with superior outcomes in the electricity industry the analysis for 28 developing economies over 1980 2001 draws on theoretical and empirical work on the impact of telecommunications regulators in developing economies controlling for privatization and competition and allowing for country specific fixed effects both regulatory law and higher quality regulatory governance are positively and significantly associated with higher per capita generation capacity this positive impact increases for more than 10 years as experience develops and regulatory reputation grows the results are robust to estimating alternative dynamic specifications including error correction models to inclusion of economy governance political risk indicators and to controlling for possible endogeneity biases the article concludes with a short discussion of causality in panel data modeling of governance models and the policy

tourism as a factor in development cooperation abstract where there is little or no industrial or agricultural base and no exploitable resource tourism may make a significant contribution to the economy of a developing country the eec provides aid to developing countries in three areas the southern mediterranean asia and latin america and africa the caribbean and the pacific the commission has produced guidelines for drawing up proposals and a typical example is presented in this article the eec also supplies high quality expertise to help define policy options and strategic plans and carry out agreed programmes long term success is more likely for specialized high income projects

clean air regulation and heterogeneity in us gasoline prices in order to improve public health in areas with air quality problems the us clean air act imposes a variety of federal regulations on gasoline which have led to a proliferation of fuel blends known as boutique fuels more than 45 fuel blends are sold nationwide we examine the effects of this program on wholesale gasoline prices the methodological innovation in this study is the use of a regulatory distance measure as a proxy for measuring market power that arises from product differentiation we find that clean air regulation increases gasoline prices by increasing the cost of refining but more importantly by creating regulatory islands it segments the market and increases the market power of firms our estimation controls for the potential endogeneity of the regulatory variables we find that ols techniques systematically underestimate the effect of regulation on gasoline prices

discontinuous losses from poverty generalized pα measures and optimal transfers to the poor abstract this paper examines the distributional properties of poverty measures which are discontinuous at the poverty line it is shown that among all the additive poverty measures only those measures with some discontinuous jump at the poverty line are such that it is optimal to allocate a given antipoverty budget either to the richest of the poor or to the poorest of the poor or to both a special class of such poverty measures is an extension of the well known p the properties of which are investigated

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

hubs and high fares dominance and market power in the u s airline industry this article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline the results indicate that an airline s share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above cost the high markups of a dominant airline however do not create much of an umbrella effect from which carriers with smaller operations in the same markets can benefit the article suggests a number of possible explanations for this asymmetry

nonlinear pricing strategies and competitive conditions in the airline industry i introduction many industries use nonlinear pricing based on product attributes one industry where this practice is long recognized is domestic airlines while price dispersion in the industry has been widely studied data limitations have prevented analysis investigating the impact of competitive conditions on price dispersion linked to nonlinear pricing as opposed to variation in costs this paper uses a novel data set that allows us to investigate how nonlinear pricing strategies vary with market structure we construct a ticket menu using standard categories of tickets including first class tickets business class tickets fully refundable tickets nonrefundable tickets and nonrefundable restricted tickets these categories exhibit substantially different prices and are available across all types of routes we investigate both how market concentration and the competitive pressures generated by southwest and other low cost carriers impact the relative fares within the ticket menu using traditional measures of concentration including both herfindahl hirschman index hhi and discrete measures used in other studies of airlines competitive duopoly and monopoly we observe only a modest impact of concentration on relative fares the discrete measures appear to be more informative indicating that concentration primarily reduces the relative fares for high end first class tickets on monopoly routes we identify a puzzle regarding the pricing of high end fares under monopoly the evidence does not support a more general relationship between concentration and other fares we find considerably stronger evidence regarding the impact of southwest on the fare structure while previous studies show that southwest s presence reduces mean fares our results provide a much richer picture the results show that southwest s presence reduces low end fares but actual and potential competition from southwest also generally leads to a substantial compression of the entire fare structure competition from other low cost carriers also affects the fare structure but does not lead to a compression of fares our analysis ties into several literatures our work is closely related to the theoretical work on nonlinear pricing and imperfect competition see e g rochet and stole 2002 stole 1995 1 generically however there is no natural empirical implementation of these models for testing more specifically in these models consumers differ in two dimensions brand loyalty and their marginal preference for quality the results of these papers show that the relationship between competition and high versus low prices turns on the correlation between consumers preferences for quality and their brand loyalty unfortunately these models generally predict monotonicity so that prices exhibit either a wider or narrower spread related to competition busse and rysman 2002 our results in contrast show that higher prices are reduced on highly concentrated routes but that intermediate prices are at most modestly affected the results for actual and potential competition from southwest generally support the predictions of rochet and stole 2002 that increased competition will lead to fare compression our study is also related to the empirical work on competition and price dispersion in airline markets there is an extensive body of work regarding the relationship between market concentration and airline price dispersion the empirical evidence on this matter is mixed in a seminal paper borenstein and rose 1994 examine concentration and price dispersion using cross sectional variation in market concentration and dispersion to identify the relationship between the two they show that airlines offer highly dispersed prices the expected absolute difference in fares between two randomly chosen passengers on the same airline and route is 36 of the average price the authors also find that price dispersion decreases with market concentration

strategic gaming in electric power markets abstract this paper presents an overview of strategic gaming used for understanding the effective company and regulatory strategies for various market participants under alternative scenarios on pricing and institutional structures for electric power utilizing the england and wales e w power pool as a testbed we develop an aggregate model of payoffs for various stakeholders under specified demand and supply scenarios with strategic moves by these stakeholders as the key input to be evaluated the use of this type of model in a strategic gaming setting is then examined together with a discussion of experience in using this approach in evaluating a particular decision problem regarding network investment strategies in the e w power market

evidence of directional price discrimination in the u s airline industry abstract this paper explores possible determinants that may affect an airline s decision to charge passengers different roundtrip fares depending on trip origin a case of directional price discrimination such fare differences cannot be the result of differences in cost as the cost of flying a roundtrip passenger does not significantly differ depending on direction it is argued that directional fare differences result from airlines recognizing that passenger price elasticities differ between route endpoints a price discriminating airline will then charge a higher roundtrip fare at the endpoint where the passenger price elasticity of demand is comparatively lower evidence is found suggesting that airlines do use differences in income to price discriminate when setting roundtrip fares fares are found to be 0 18 0 43 higher on average for each 1000 difference in average per capita income between origin and destination metro areas this finding is sensible assuming that higher incomes reduce the price elasticity of demand for air travel with richer passengers being less sensitive to the cost of travel

rivalry between strategic alliances abstract rivalry between strategic alliances is investigated in a model where each alliance member maximizes its own profit and some share of its partner s profit a complementary alliance confers a strategic advantage by allowing the partners to credibly commit to greater output owing to both within alliance complementarities and cross alliance substitutabilities although rivalry between different alliances can sometimes lead to a prisoners dilemma for firms it tends to improve economic welfare on the other hand an alliance that arises due purely to the threat of entry may reduce welfare

do patent rights matter 40 years of innovation complexity and productivity abstract does the rigorous protection of patents advance or retard economic development two decades ago a new global standard of intellectual property swept across developing and industrialized nations through the implementation of the wto s trips agreement many years later the issue of patent rights remains contentious in this paper we focus on the effects of patent rights systems on total factor productivity growth using dynamic panel regression analysis for 70 countries from 1965 to 2009 we show that the effects of stronger or more rigorous patent systems are insignificant for productivity growth in both developing and industrialized countries why does the strength of patents appear to have no impact on productivity classic economic theory suggests that stronger patent systems incentive innovative output with important spill over effects for productivity and growth we offer an alternative explanation using data from the economic complexity index we find that while patents rights are increasingly irrelevant to productivity the relationship between economic complexity and productivity is highly positive and significant our results are consistent with the contributions of the absorptive capacity theory in that they suggest it is not the discovery and ownership of novel products and processes at the innovative frontier that induces productive growth but the ability to adapt replicate and diffuse along the international productive chain

price dispersion and differentiation in online travel an empirical investigation previous research has examined whether price dispersion exists in theoretically highly efficient internet markets however much of the previous work has been focused on industries with low cost and undifferentiated products in this paper we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents otas we find that different otas offer tickets with substantially different prices and characteristics when given the same customer request some of this variation appears to be due to product differentiation different otas specialize by systematically offering different trade offs between ticket price and ticket quality minimizing the number of connections matching requested departure and return time however even after accounting for differences in ticket quality ticket prices vary by as much as 18 across otas in addition otas return tickets that are strictly inferior to the ticket offered by another ota for the same request between 2 2 and 28 of the time overall this suggests the presence of both price dispersion and product differentiation in the online travel market

aggregate poverty measures the way poverty is measured is important for an understanding of what has happened to poverty as well as for anti poverty policy evaluation sen s 1976 pathfinding work has motivated many researchers to focus on the way poverty should be measured a poverty measure argued by sen should satisfy certain properties or axioms and the desirability of a poverty measure should be evaluated by these axioms during the last two decades many researchers have adopted the axiomatic approach pioneered by sen to propose additional axioms and develop alternative poverty measures the objective of this survey is to provide a clarification on the extensive literature of aggregate poverty measures in this survey we first examine the desirability of each axiom the properties of each poverty measure and the interrelationships among axioms the desirability of an axiom cannot be evaluated in isolation and some combination of axioms may make it impossible to devise a satisfactory poverty measure some axioms can be implied by other axioms combined and so are not independent some others are ad hoc and are disqualified as axioms for poverty measurement based on the interactions among axioms we identify the core axioms which together have a strong implication on the functional form of a poverty measure we then review poverty measures that have appeared in the literature evaluating the interrelationships among different measures and examining the properties of each measure the axioms each measure satisfies violates are also summarized in a tabular form several good poverty measures which have not been documented by previous surveys are also included

experience as a barrier to contestability in airline markets contrary to one of the predictions of the contestability hypothesis price in deregulated u s passenger airline markets is related to actual competition from diversifying former intrastates and newly established carriers more important former intrastates have a larger impact on price than do newly established firms a result consistent with these markets being imperfectly competitive because of an industry experience barrier to entry unlike actual competition a measure of potential competition has no effect in constraining price copyright 1989 by mit press

combined effects of capacity and time on fares insights from the yield management of a low cost airline abstract based on two strands of theoretical research this paper provides new evidence on how fares are jointly affected by in flight seat availability and purchasing date as capacity based theories predict it emerges that fares monotonically and substantially increase with flight occupancy after controlling for capacity utilization our analysis also supports time based theories indicating a u shaped temporal profile over a two month booking period as well as a sharp increase in fares in the two weeks prior to departure

patent quality and research productivity measuring innovation with multiple indicators we analyse the determinants of the decline in research productivity using panel data on manufacturing firms in the us for the period 1980 93 we focus on three factors the level of demand the quality of patents and technological exhaustion we develop an index of patent quality using detailed patent information and show that using multiple indicators substantially reduces the measured variance in quality research productivity at the firm level is inversely related to patent quality and the level of demand as predicted by theory and patent quality is positively associated with the stock market value of firms

competition in european aviation pricing policy and market structure the purpose of this paper is to analyze the impact of liberal bilateral agreements on some european air routes in terms of price competition and market structure the author proposes a model that explains firms behavior and shows that after the liberalization firms exploit their cost advantages and differentiate their products more but market structure still depends on access to airport facilities and other ancillary services controlled by the flag carriers these results differ from american evidence in that the author finds that the effect of airport presence on prices through lower costs more than offsets the effect through higher perceived quality copyright 1995 by blackwell publishing ltd