The Cost Factor in Patent Systems

The objective of this paper is to assess to what extent the cost of patenting affects the demand for patents. The empirical analysis, which focuses on the patent systems of the USA, Japan, and Europe in 2003, leads to the following methodological and empirical conclusions: (1) for a proper international comparison, the size of the market and the average number of claims included in a patent must be accounted for; (2) when the cost per claim per capita (the 3C-index) is considered, a negative linear relationship appears between the cost of patenting and the number of claims that are filed; (3) after the grant of a patent by the EPO, the translation, validation and transaction costs induced by an effective protection in several European countries witness a highly fragmented and very expensive European market for intellectual property; (4) for a patent designating 13 European countries, the 3C-index is about ten (two) times higher than in the US (Japanese) system (for process and translation costs up to the grant); (5) The European market being more than twice as large as the US market in terms of inhabitants, the 3C-index suggests that there would be a clear justification for higher nominal examination fees at the EPO, that would ensure the pursuit of a rigorous granting process.     

REMOVING THE “VEIL OF IGNORANCE”: NONLINEARITIES IN EDUCATION EFFECTS ON GENDER WAGE INEQUALITIES

A large literature studies the mean gender wage gap in developing countries and finds mixed evidence about the role of education policies in closing gender earnings inequalities. We contribute to this literature by exploring two types of nonlinearities in wage earning regressions: (1) nonlinearities on the effects of education on expected earnings along the distribution of education endowments; and (2) heterogeneities on the contributions of education to the gender wage gap at different quantiles of the wage distribution. Our analyses provide new insights on how these nonlinear effects can be used to set up better targeted gender and development policies. (JEL I26, C14)     

Threshold effects in panel data stochastic frontier models of dairy production in Canada

One of the most enduring problems in econometrics is how to properly account for heterogeneity among firms. Threshold regression models are intuitively appealing methods to deal with this issue. We consider a fixed-effect panel data stochastic frontier model (Schmidt and Sickles, 1984; Martin-Marcos and Suarez-Galvez, 2000) and, relying on Hansen (1999, 2000a), we propose an estimator that accommodates multiple thresholds. Our model assumes absence of any unmeasured time invariant heterogeneity across firms as in Greene (2005, p. 277). Slope and threshold parameters can be estimated using a within estimator combined with a grid search over the threshold parameters. Testing for threshold effects is problematic because threshold parameters are not identified under the null hypothesis, a case of the so-called Davies' problem. We apply the bootstrap procedure proposed by Hansen (1999, 2000a) to test for the presence of thresholds. An asymptotic confidence set for the threshold parameter can be obtained by inverting an LR test, using the distribution result presented in Hansen (1999, 2000a). Our empirical application features a panel of Quebec dairy farms. We use farm size as the threshold variable. The presence of a trend in the specification matters for the determination of the number of thresholds. Technical efficiency scores and rankings of farms estimated from competing model specifications are highly correlated and do not vary significantly across groups of farm sizes defined by the threshold parameter values.     

The impact of public R&D expenditure on business R&D*

This paper attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms has a positive effect on business financed R&D (except if the funding is targeted towards defence activities). Tax incentives have an immediate and positive effect on business-financed R&D; Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support; Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D; The stimulating effect of government funding varies with respect to its generosity: it increases up to a certain threshold (about 10% of business R&D) and then decreases beyond; Defence research performed in public laboratories and universities crowds out private R&D; Civilian public research is neutral for business R&D. * We thank the participants to various seminars, including the OECD Committee for Scientific and Technology Policy and the NBER 2000 Summer Institute on Productivity for helpful comments and suggestions. All opinions expressed in this article are those of the authors and do not reflect necessarily the views of the OECD or Université Libre de Bruxelles.     

The effectiveness of capital controls: evidence from Colombia and Thailand

In the run up to the financial crisis of 2007–2009 many developing nations were subject to massive inflows of capital, capital that their financial systems found difficult to absorb. One of a number of policy options to respond to such inflows is unremunerated reserve requirements (URR). Two countries, Colombia and Thailand, deployed URR in the second half of the decade. This paper analyses the effectiveness of the URR in those two instances. We find that URRs were modestly successful in Colombia and Thailand. In Colombia, the controls were able stem an asset bubble in the stock market. In Thailand, the URR reduced the overall volume of flows, and the announcement of the URR caused a sharp drop in asset prices. However, some of the other goals of capital controls were not fulfilled. The results in this paper demonstrate that there is still a role for capital controls in the twenty-first century, but such controls should be more sophisticated than in years past.     

Manufacturing growth accelerations in developing countries

This paper investigates the factors driving manufacturing growth accelerations in a sample of 134 developing countries over the period 1970 to 2014. We first identify growth acceleration episodes of manufacturing value added (MVA) by their year of initiation and according to a country’s income classification. We then estimate a probit model to explain what factors predict these MVA growth accelerations. Our results show that human capital and institutions represent contextual factors that favor the growth of manufacturing, together with macroeconomic policies related to investment, and openness to foreign trade and capital. We also find that most of these factors not only foster episodic accelerations of industry, but they contribute as well to a sustained process of industrialization that characterized the process of economic growth of a few successful countries over the period 1970 to 2014.     

Dynamic competition with network externalities: how history matters

We consider dynamic competition among platforms in a market with network externalities. A platform that dominated the market in the previous period becomes “focal” in the current period, in that agents play the equilibrium in which they join the focal platform whenever such equilibrium exists. Yet when faced with higher-quality competition, can a low-quality platform remain focal? In the finite-horizon case, the unique equilibrium is efficient for “patient” platforms; with an infinite time horizon, however, there are multiple equilibria where either the low- or high-quality platform dominates. If qualities are stochastic, the platform with a better average quality wins with a higher probability, even when its realized quality is lower, and this probability increases as platforms become more patient. Hence, social welfare may decline as platforms become more forward looking.     

Middle Class,Government Effectiveness and Poverty in the EU: A Dynamic Multilevel Analysis

Using the 2008-2011 EU-Statistics on Income and Living Conditions data, we implement a dynamic three-level model to analyze poverty persistence in 26 EU countries. We isolate true state dependence phenomena by disentangling the effects of observed and unobserved heterogeneity at country level and employ cofactors not previously considered by the literature. Estimates show that unobserved heterogeneity across individuals remains large, even after explicitly controlling for the observable components of individual characteristics. The initial value of poverty has large effects on current poverty status but this effect is not uniform across countries. The risk of poverty is negatively related to the size of the structural middle class and to the level of structural social expenditure but it increases when lagged total public expenditure increases (with respect to the structural value). There is strong evidence of true state dependence.     

Developing the marketing concept in public accounting firms

As the American Institute of Certified Public Accounts relaxes its practice development restrictions, CPA firms find themselves with a need to develop more aggressive approaches to the markets they serve. This paper focuses on the development of a marketing strategy for an illustrative market, that of small, rapidly-growing high technology firms. Results from a telephone survey of company executives serve as the basis for strategy development. In addition, the evaluation of a small firm and its accounting needs are provided in a hypothetical example to dramatize the conclusions. The results suggest that the burden may be on CPA firms to anticipate, recognize, and meet the accounting needs of their clientele.