Admission standards,student effort,and the creation of skilled jobs

We consider the implications of expanding enrollment through lower standards in a model with human capital externalities and a market failure. Workers and firms make uncoordinated investment choices prior to random matching. Investment choices depend on the expected productivity of the counterpart in production. The setting generates a potential human capital externality as a more skilled labor force induces more skilled job openings. Exploiting the externality is complicated by a market failure which may cause some workers to earn a degree but not put forth the effort required to become highly skilled. We show that beyond a threshold, increased enrollment through low standards can be poor policy. Policies which increase returns to agents and firms in best matches can improve outcomes.     

On Clustering in the Location of R&D: Statics and Dynamics

Empirical analyses of research and development find strong evidence that these activities tend to cluster geographically. Clusters are thought to emerge from the presence of localized positive externalities. This paper presents a model of this clustering behaviour. We find that phase changes in clustering exist both as the strength of local externalities changes and as the degree of heterogeneity among firms changes. The dynamics of the system are examined as it responds to shocks to the size of the market for R&D output, and the length scale of the spatially dependent externalities. Dynamic responses take place in two distinct stages: a rapid response to the change in market systems which takes place throughout the space, with litlle regard to externality effects; followed by a slow re-agglomeration process as producers change their spatial decisions to lower the costs of the new production level.     

Convergence,technological interdependence and spatial externalities: a spatial dynamic panel data analysis

This study adopts a spatial dynamic panel data approach and spatial quasi-maximum likelihood to re-estimate the speed of growth convergence in 91 countries based on technological interdependence and spatial externalities. We perform a conditional Lagrange multiplier test for spatial error dependence and find some differences to previous studies. First, the switch from a cross-sectional to a dynamic panel data framework enables the estimated rate of conditional convergence to be higher, more accurate and more appropriate for realistic and theoretical expectations. Second, the spatial Durbin model (SDM) is a general form of simplified model that considers spatial error correlation, and its likelihood ratio test for the theoretical model of ‘learning by doing’ effect provides further evidence. Finally, statistical tests find that spatial correlation not only occurs in each variable, but also appears in the error term. Thus, the SDM does not exist in the assumptions associated with the spatial error, which are not necessarily correct.     

Heterogeneity vs. externalities in technological competition: A tale of possible technological landscapes

The article presents a stochastic interaction model based on Gibbs random fields to analyze technological competition in a population of heterogeneous adopters with local or global externalities. The relationships between both heterogeneity and externalities and imperfect and asymmetric information are first emphasized. When local externalities and heterogeneity coexist, the technological landscapes of the industry are then shown to depend on the relative influence of these two parameters, with a phase transition: technologies coexist either in approximately equal market shares when heterogeneity is high enough or with one of the technologies only surviving in technological niches when local externalities dominate. Niches do also spontaneously appear: technological options survive in economic space due to the existence of some amount of heterogeneity among agents. On the contrary, when global externalities are added, pure standardization almost always occurs. We finally argue that different public policies should be designed so as to fit with different technological landscapes.     

Firm Organization,Technology And Performance: An Empirical Study ∗

The purpose of the study is to characterize different styles of work organization in French firms and their current changes and to link them to the use of specific technologies and to firms performance. The data which are used arc of two kinds: a labor force survey (1 470 blue collar) and a business survey (7 089 firms). We show that two main variables create differences among firms' organization devices: the intensity of communication within the workshop and the level of autonomy of workers (facing technological and hierarchical constraints). The use of advanced technologies and the skill of the labor force are positively linked to both organizational variables. Therefore. ‘Communicating organization’ and organizational innovation seem to aim at creating conditions for individual and collective learning on new technologies. They also enhance the ability of the firm to adapt to changing market conditions through technological innovation and inventory reduction, These views are supported by econometric estimation.     

Technology and worker coopratives: some UK evidence and a framework for investigation

This paper considers the relationship between cooperatives i n the ‘new wave’ and the technology they use. Data and examples from the UK are presented to show that there is no general support either for the ‘optimistic’ hypothesis that cooperatives are necessarily able to make humanizing choices about technology or for the ‘pessimistic’ hypothesis that they are completely constrained by technology. A framework is developed for analysing the factors which may or may not allow technological choices. The paper goes on to form a new hypothesis in two parts: firstly, that small firms i n general have more freedom to make choices about technology the more they have independence from large firms and the market, and the more they are i n areas of product innovation, particularly IT-based innovation; secondly, given a degree of freedom to make such choices, the choice is more likely to be made successfully in the direction of humanizing uses of technology the more there is potential for identif;cation between job, product and social or political aims. The paper concludes by describing a research project now under way exploring the relative importance of these factors in established UK worker cooperatives.     

Demand competition and investment heterogeneity in industries based on systemic technologies: evidence from the US long-distance telecommunications services industry, 1984–1996

Industries based on systemic technologies are often characterized by a dynamically evolving market structure. The market structure that provides the context for firms’ investment choices itself evolves due to the feedback effect of firms’ investments. In such cases, analyses of investment-performance relationship, purporting to explain sustainable competitive advantages, should ideally account for the endogeneity of the determinants of market structure—technology, demand, and policy—and firms’ investment choices. This paper focuses on the endogeneity of the demand-side determinants of market structure and firms’ demand-side investments under the assumed conditions of constant technology and policy environment. In doing so it contradicts the extant depiction of the evolution of industrial market structure in the above context as primarily caused by the evolution of underlying technological system in response to firms’ endogenous technological investments that generate sustainable competitive advantage for the dominant firms. A dynamic evolutionary model of demand competition captures the competition in the downstream market for basic industry product and its complements in an industry based on systemic technology during its post-interoperability stage. A natural experiment drawn from the US Long-distance telecommunications services industry during 1984–1996 allows testing the hypotheses drawn from the above model in a panel data setting.     

Localized Technological Search And Multi-Technology Companies

Two major themes that have emerged from recent theoretical and empirical studies of technology at the firm level have been the tendencies on the one hand to localization of technological search and on the other hand to the spread of multi-technology companies, required to incorporate an ever-growing extent of advanced technologies. These trends appear contradictory. This paper analyses the contradictions through the use of patents data as an indicator of technological specialization. Two industries and some of their leading corporations are singled out for analysis - the electronics industry (especially in Europe). as an upstream ‘high-tech’ industry. and the food-processing industry, a downstream sector that is now having to make use of a burgeoning range of technologies. The paper examines their major corporate changes in the light of the technological data, through the use of concentration indices. It shows that both industries are trying to reconcile the contradiction with greater specialization taking place in sub-units of the firms. though the effect is more muted in food-processing where demand factors predominate. The need to command multiple diverse technologies is being targeted by restructuring firms in terms of both external relationships and internal reorganizations, but the basic contradiction still remains and may bc insoluble.     

Internal And External Adjustment To New Technologies

Schumpeterian creative destruction occurs not only at the industry level, but also with each firm trying to maintain or improve its position in the technology race. Based on a rich data set on more than 4,000 German business units, this paper shows that the simultaneous occurrence of hiring and separations is more likely in firms with the most advanced technologies in use than in units more distant from the technological frontier. This positive relation between technological advance and creative destruction documented also by churning and ‘excess job reallocation equations - holds particularly in recovery years, while it is weak during a recession. The explanation provided for this finding in the paper is that firms can also improve technologies by upgrading machinery and/or retraining workers, and these ‘implementation’ costs arc likely to be lower during economic downturns.     

A consumer-based model of competitive diffusion: the multiplicative effects of global and local network externalities

Competitive diffusion of two incompatible technologies, such as PC vs. Macintosh, VHS vs. Betamax and so on, is studied under the framework of a spatial game in which consumers are distributed on a two-dimensional square lattice network. The consumers play coordination-like games with their nearest neighbors and imitate the most successful strategy in their neighborhood in terms of aggregated payoffs after each round. The effects of global network externality are realized in the dynamic payoff matrix of the game, and the framework of spatial game provides the model with the effects of local network externality. These two types of externalities are set as multiplicative, that is, as nonlinear. Both simulations and mean-field approximation show that not only total but also partial standardization (robust polymorphic equilibrium) occurs depending upon the parameters and initial configurations, even when there are positive effects of both global and local network externalities. Moreover, effects of innovation factors that alter paths toward a lock-in situation are studied. It is shown that both the timing and the size of the innovation factors matter for a disadvantaged technology in order to overwhelm a market.JEL Classification: C7, D8, O3We are obliged to Professor John Paul Boyd at the University of California, Irvine and our anonymous referees for their constructive comments.     

Choosing price or quantity? The role of delegation and network externalities

We consider a differentiated duopoly and endogenise the firm choice of the strategy variable (price or quantity) to play on the product market in the presence of network externalities. We model this choice by assuming both competition between entrepreneurial (owner-managed) firms and competition between managerial firms in which market decisions are delegated from owners to revenue-concerned managers. While network externalities are shown not to alter the symmetric equilibrium quantity choice arising in the no-delegation case, sufficiently strong network effects allow us to eliminate the multiplicity of equilibria under delegation and lead to a unique equilibrium in which both firms choose price.     

Technological districts localized spillovers and productivity growth. The Italian evidence on technological externalities in the core regions

Technological R&D externalities are the effects on the technological capacity of each firm stemming from the complementary and interrelated activities of R&D activities of other firms that operate both in the same industry and in other industries. R&D technological externalities are specially influential at the regional level. Regional proximity enhances the circulation of information, the opportunities for external learning; the scope for capitalizing on potential complementarities among the variety of firms and the different R&D activities being carried out by each firm, and the opportunity for technological networking. The empirical evidence on core regions in Italy in the 1980s confirms that regional clustering of complementary and interrelated R&D activities facilitated the emergence of technological districts. Firms located within technological districts benefited enormously from the R&D technological externalities spilling out from the complementary and interrelated R&D activities of other firms localized in the same area. Consequently, firms localized within technological districts had fast rates of introduction of technological innovations which, in turn, made it possible for total factor productivity levels to be raised with comparatively low levels of intra-muros R&D expenses.     

Location equilibrium with asymmetric firms: the role of licensing

It is known that if exogenous cost heterogeneities between the firms in a spatial duopoly model are large, then the model does not have a pure-strategy equilibrium in location choices. It is also known that when these heterogeneities are stochastically determined after firms choose their locations, spatial agglomeration can appear. To tackle these issues, the current paper modifies the spatial framework by allowing firms to exchange the cost-efficient production technology via royalties. It is shown that technology transfer guarantees the existence of a location equilibrium in pure strategies and that maximum differentiation appears in the market.     

Automation,markets, and scale: can flexible niching modernize US manufacturing

The nimble use of programmable automation to permit small- and medium-sized manufacturing firms, individually and in concert, to create and respond to growing ‘niche’ markets has been held up as a key to the revitaization of mature industrial regions and, by extension, developed national market economies. Are formerly mass markets indeed becoming more fragmented, more ‘nichified’? If so, is the trend a structural, fundamental one, reflecting changing consumer tastes and/or the eclipse of scale economies as determinants of industrial structure? Or is the apparent success of niche-focused producers a corollary of growing income inequality and its impact on the structure of consumption? As for the supply side of the phenomenon, are small- and medium-sized firms closing their productivity gap with large, mass producers? Or is ‘nimble niching’ instead part of a US productivity problem rooted in excessive industrial dualism? Can one imagine a progressive type of dualism, in which specialization rather than wage differentials drives the division of tasks among different kinds of firms? If so, can and should public policy help such a regime to emerge?     

Network effects, market structure and industry performance

This paper analyzes oligopolistic markets with network externalities. Exploiting a minimal complementarity structure on the model primitives that allows for pure network goods, we prove existence of non-trivial fulfilled-expectations equilibrium. We formalize the concept of industry viability, investigate its determinants, and show that it improves with more firms in the market and/or by technological progress. These results enlighten some well-known conclusions from case studies in the management strategy literature. We also characterize the effects of market structure on industry performance, which depart substantially from ordinary markets. The approach relies on lattice-theoretic methods, supplemented with basic insights from nonsmooth analysis.     

Spatial effects of foreign direct investment in US states

Abstract This paper estimates the aggregate productivity effects of Marshallian externalities generated by foreign direct investment (FDI) in US states, controlling for Marshallian externalities and other spatial spillovers generated by domestic firms. A regional production function framework models externalities and other spatial spillovers explicitly as determinants of total factor productivity. We employ a system generalized method of moments (GMM) estimator to account for the potential endogeneity of FDI and the presence of spatial lags. Using data for US states from 1977–2003, the results indicate that FDI generates positive externalities, while externalities from domestic firms are negative.     

Rapid Technology Change, ‘Technological Visions’, Corporate Organisation And Market Structure

This paper is a contribution to the analysis of how rapid technology change influences market structure. The paper uses a simple simulation model to explore the effects of four main factors on the development of market structure. These are: (1) the variance (or unpredictability) of the technology trajectory; (2) the speed with which the organisation's ‘technological vision’ adjusts to ongoing technological developments; (3) the absorptive capacity of each division in the multi-divisional firm to experience gained in other divisions; (4) the extent to which competence-destroying innovations generate greater cost penalties for the division of a multi-divisional firm than for a comparable mono-divisional firm. Simultion results are obtained for 100 technological trajectories, and a variety of parameterisations. While there is a tendency for noisier trajectories to disadvantage the larger multi-divisional firm, there are conditions under which such a firm benefits from a noisy technological environment. When competence-destorying innovations affect the division of a multi-divisional firm no worse than the comparable mono-divisional firm, the multi-divisional firm is not disproportionately affected by a noisy trajectory. It may, however, be seriously damaged by a slow adjustment of technological vision, especially when all scale economies are dynamic (rather than static). The simulations confirm that the absorptive capacity of each division to experience from others can be critical in determining the ultimate market structure. A brief empirical motivation for the model is offered by reference to some case studies of the semiconductor industry.     

Network technologies,communication externalities and total factor productivity

The main aim of this paper is to determine the factors which enhance or temper firms’ private incentives to use communications technologies that are characterised by network externalities and allow firms to influence their rate of technological change or total factor productivity (TFP). As regards the impact of the network effect on TFP, we find that when the externality parameter is low, a slightly negative effect appears, but this effect is reversed when the externality is higher. This relationship is valid regardless of the number of firms. Our result is particularly interesting because it offers a possible explanation for the Solow productivity paradox. We conclude that, in addition to the degree of network effects, market structure, consumer preferences and the number of users also have a very important influence on TFP and technological change.     

科技创新、产业集聚与新型城镇化效率

以新型城镇化为主要视角,使用中国270个地级及以上城市2010—2019年的城市数据和空间数据,运用面板数据模型和空间计量模型识别了科技创新与产业集聚对新型城镇化效率的影响,并考察了其中的影响机制。结果表明:(1)科技创新对新型城镇化效率具有显著正向影响,并存在空间溢出效应。(2)产业集聚对新型城镇化效率具有显著负向影响,并存在空间溢出效应,说明在中国产业集聚的负外部性大于其正外部性。(3)随着产业集聚度的提高,科技创新对新型城镇化效率的影响会显著提高。无论是OLS回归模型还是空间计量模型,文章的结论均具有稳健性,因此新型城镇化效率的提高在提高创新投入的同时需要合理规划产业布局。     

Firm exit,technological progress and trade

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher productivity firms survive longer, most firm closures are young firms, higher productivity exporters are more likely to continue to export compared to less productive exporters and market exits as well as firm closures are typically preceded by periods of contracting market shares. The present paper shows that the simple inclusion of exogenous economy wide technological progress into the standard Melitz (2003) model generates a tractable dynamic framework that generates endogenous exit decisions of firms in line with the stylized facts. Furthermore, we derive the effects of faster technological progress and trade liberalization on export market exit and firm closure.