CDM 20 years after

ABSTRACT

In year 1998, the seminal paper Research Innovation and Productivity: An Econometric Analysis at the Firm Level was published in this journal. The empirical framework, following on ideas in the research of Zvi Griliches at the NBER and commonly labeled CDM (the acronym of the three authors’ names, Crépon, Duguet and Mairesse) is one of the most influential contributions in recent literature on economics of innovation. The original CDM paper and papers inspired by its framework have received hundreds of citations in the empirical innovation literature. Whether directly linked or not to the CDM framework, the flow of studies improving on and enlarging the scope and methods of the empirical literature on R&D, innovation and productivity is continuing. Some of them, for example, focus on financing innovation, innovation and employment, innovation and trade, competition, or intellectual property; some adopt a managerial perspective, while others prefer an innovation system approach in a Schumpeterian tradition, etc. This introduction to the special issue of EINT surveys a collection of 12 papers on the CDM model by 25 authors from eight countries. The papers take stock of the evolution of research based on the original CDM model launched 20 years ago, linking it to the previous literature, and proposing developments and generalizations of it in various dimensions.     

WHICH AGGLOMERATION EXTERNALITIES MATTER MOST AND WHY?

This paper revisits the ongoing discussion on the importance of agglomeration externalities – specifically specialization, diversity and competition effects – that may contribute to innovation, productivity and urban employment growth. Previous meta‐analyses suggested that the evidence on agglomeration externalities is strongly context‐specific. Expanding an earlier analysis of 31 articles, we seek to draw in this paper more robust conclusions by means of the statistical evidence for agglomeration externalities presented in 73 scientific articles, all building on the seminal work of Glaeser et al. (1992). Our results confirm that the heterogeneity among studies is huge and can only be partially accounted for by means of an ordered probit analysis. Additionally, some evidence of publication bias is found. We conclude that the conventional lines of inquiry in this literature may now have reached strongly diminishing returns. New lines of inquiry, using rich micro‐level data on firms and workers, dynamic general equilibrium models at the macro level, more attention for spatial and temporal variation in the impacts of agglomeration, and further investigations into the spatial scope of externalities are promising avenues for further research that can enhance our understanding of how agglomeration externalities continue to fuel our increasingly urbanized world.     

Optimal search auctions

We study the design of profit maximizing single unit auctions under the assumption that the seller needs to incur costs to contact prospective bidders and inform them about the auction. With independent bidders’ types and possibly interdependent valuations, the seller's problem can be reduced to a search problem in which the surplus is measured in terms of virtual utilities minus search costs. Compared to the socially efficient mechanism, the optimal mechanism features fewer participants, longer search conditional on the same set of participants, and inefficient sequence of entry.     

Rawlsian pricing of access to public facilities: A unidimensional illustration

We consider a setting where citizens using a public facility face an idiosyncratic private access cost and must also contribute to the costs of facility. We show that if the population is uniformly spread over the real line, the cost of a facility is independent of location and access costs are linear in distance, the Rawlsian access pricing is the unique cost sharing solution that satisfies the “core property” of secession-proofness. The latter amounts to the voluntary participation principle under which no group of citizens should be charged more than the cost incurred if it had acted on its own.     

Abstracts

Quality & Quantity -     

Convergence - the Maastricht approach to economic and monetary union (EMU) in Europe

This article reviews the concept of convergence in the Maastricht Treaty and notes that, while in certain areas the convergence objectives are quite ambitious, in other areas the objectives for the transition period are surprisingly limited. By end-1992, much progress had already been achieved on convergence in a majority of EC countries (and countries applying for membership). Thus, despite the wave of pessimism that followed the recent exchange market crisis, it is still quite possible that a majority of EC members could qualify for monetary union by 1997. However, this would require further significant adjustment in many cases in the fiscal area. Based on the Multimod Model used at the Fund, the deflationary effect of this fiscal consolidation would be small and short lived.     

Revisiting the trans-situationality of values in Schwartz’s Portrait Values Questionnaire

Quality & Quantity - Schwartz in his famous theory of basic values follows Parsons and Rokeach in arguing that human values are trans-situational or context free. For any individual, the same...     

REGIONAL SPECIALIZATION,URBAN HIERARCHY,AND COMMUTING COSTS*

We consider an economic geography model of a new genre: All firms and workers are mobile and their agglomeration within a city generates costs through competition on a housing market. In the case of two sectors, contrasted patterns arise. When one good is perfectly mobile, the corresponding industry is partially dispersed whereas the other is agglomerated, thus showing regional specialization. When one sector supplies a nontradeable consumption good, this sector is more agglomerated than the other. The corresponding equilibrium involves an urban hierarchy in that a larger array of varieties of the two goods is produced within the same city.