Processes and patterns in transitions and system innovations: Refining the co-evolutionary multi-level perspective

This article investigates transitions at the level of societal functions (e.g., transport, communication, housing). Societal functions are fulfilled by sociotechnical systems, which consist of a cluster of aligned elements, e.g., artifacts, knowledge, markets, regulation, cultural meaning, infrastructure, maintenance networks and supply networks. Transitions are conceptualised as system innovations, i.e., a change from one sociotechnical system to another. The article describes a co-evolutionary multi-level perspective to understand how system innovations come about through the interplay between technology and society. The article makes a new step as it further refines the multi-level perspective by distinguishing characteristic patterns: (a) two transition routes, (b) fit–stretch pattern, and (c) patterns in breakthrough.     

Technology assessment: Impact of high-tech engineering research on energy consumption

A technology assessment (TA) program was launched in Switzerland in 1991. One project in the series of pilot projects was meant to assess the impact of so-called LESIT technologies on energy consumption. (LESIT was a priority research program and a German acronym for power electronics, systems and information technology.) In this paper the institutional environment, applied methods and main results of the TA study are summarised. One of the questions that arose was whether it is reasonable to expect a high-tech engineering research program to serve any societal goals other than the more immediate technical and economic goals the research partners in university and industry are accustomed to follow. It was found that without special efforts this expectation was not realistic. Politically desirable goals are best served when enough emphasis, time, and money are given to the process of bringing together research partners from academia and industry who all have a (self-serving) interest in furthering the politically desirable goal and then support their collaboration.     

Searching for the sunk cost fallacy

We seek to isolate in the laboratory factors that encourage and discourage the sunk cost fallacy. Subjects play a computer game in which they decide whether to keep digging for treasure on an island or to sink a cost (which will turn out to be either high or low) to move to another island. The research hypothesis is that subjects will stay longer on islands that were more costly to find. Eleven treatment variables are considered, e.g. alternative visual displays, whether the treasure value of an island is shown on arrival or discovered by trial and error, and alternative parameters for sunk costs. The data reveal a surprisingly small sunk cost effect that is generally insensitive to the proposed psychological drivers. Electronic Supplementary Material Supplementary material is available in the online version of this article at . Jel Classification C91, D11     

Do the Merits Matter More? The Impact of the Private Securities Litigation Reform Act

This article examines the effect of the Private Securities LitigationReform Act of 1995 (PSLRA) on stockholder lawsuits. We explorethe role of restatements, earnings forecasts, and insider tradingin the filing and resolution of lawsuits for a sample of hightechnology firms. Consistent with our predictions, there isa post-PSLRA shift away from litigation based on forward-lookingearnings disclosures. Conversely, there is a significantly greatercorrelation between litigation and both earnings restatementsand abnormal insider selling after the PSLRA. Finally, we finda post-PSLRA increase in the likelihood of settlement for casesinvolving earnings restatements.     

Can intertemporal choice experiments elicit time preferences for consumption?

The paper considers what can be inferred about experimental subjects’ time preferences for consumption from responses to laboratory tasks involving tradeoffs between sums of money at different dates, if subjects can reschedule consumption spending relative to income in external capital markets. It distinguishes three approaches identifiable in the literature: the straightforward view; the separation view; and the censored data view. It shows that none of these is fully satisfactory and discusses the resulting implications for intertemporal decision-making experiments. JEL Classification C90, C91, D90, D91, D11, D12     

EFFECT OF GROUPING OF DATA ON THE DIVERGENCE BETWEEN LASPEYRES AND PAASCHE FORMS OF QUANTUM INDEXES*

Historical data for the manufacturing industry in the United States and United Kingdom are quoted, showing in most cases divergences between Laspeyres and Paasche forms of the quantum index that are by no means negligible. When the Paasche index for two of the series is recalculated with quantity indicators for industries instead of for products, the divergence is greatly reduced, and when quantity indicators for industry groups are substituted it almost disappears. This raises some questions about the practices of econometricians and statisticians, which are discussed. In a mathematical appendix by E. R. Coleman it is suggested that the grouping effect referred to does not depend on the particular way in which the data are grouped in most quantum indexes.     

Network externalities and long-run market shares

We study a dynamic duopoly model with network externalities. The value of the product depends on the current and past network size. We compare the market outcome to a planner. With equal quality products, the market outcome may result in too little standardization (i.e. too many products active in the long run) but never too much. The potential inefficiency is non-monotonic in the strength of the network effect, being most likely for intermediate levels. When products differ in quality, an inferior product may dominate even when the planner would choose otherwise, but only if the discount factor is sufficiently large     

Sectoral Energy- and Labour-Productivity Convergence

This paper empirically investigates the development of cross-country differences in energy- and labour productivity. The analysis is performed at a detailed sectoral level for 14 OECD countries, covering the period 1970–1997. A σ-convergence analysis reveals that the development over time of the cross-country variation in productivity performance differs across sectors as well as across different levels of aggregation. Both patterns of convergence as well as divergence are found. Cross-country variation of productivity levels is typically larger for energy than for labour. A β-convergence analysis provides support for the hypothesis that in most sectors lagging countries tend to catch up with technological leaders, in particular in terms of energy productivity. Moreover, the results show that convergence is conditional, meaning that productivity levels converge to country-specific steady states. Energy prices and wages are shown to positively affect energy- and labour-productivity growth, respectively. We also find evidence for the importance of economies of scale, whereas the investment share, openness and specialization play only a modest role in explaining cross-country variation in energy- and labour-productivity growth.