Do Spillovers Stimulate Incremental or Drastic Product Innovations? Evidence from German Establishment Data*

Despite the generally recognized importance of knowledge spillovers, the empirical literature is essentially silent on the type of innovation stimulated by spillovers. We estimate the determinants of product innovations differing in their degree of newness to the adopting firm. Knowledge spillovers from rivals have a positive impact on incremental innovations. This impact is largely independent of participation in R&D cooperation. Spillovers exert no such independent influence on drastic innovation activities. The results support the hypothesis that establishments face difficulties in using knowledge that comes from areas they are not familiar with. Establishments exploit spillovers for incremental innovations rather than for drastic innovations. To some degree R&D cooperation can help to overcome the difficulties in using spillovers for drastic innovations. Furthermore, our estimates provide evidence that the firm's own R&D effort and the use of outside information are substitutes.     

Are batteries ready for plug-in hybrid buyers?

The notion persists that battery technology and cost remain as barriers to commercialization of electric-drive passenger vehicles. Within the context of starting a market for plug-in hybrid electric vehicles (PHEVs), we explore two aspects of the purported problem: (1) PHEV performance goals and (2) the abilities of present and near-term battery chemistries to meet the resulting technological requirements. We summarize evidence stating that battery technologies do not meet the requirements that flow from three sets of influential PHEV goals due to inherent trade-offs among power, energy, longevity, cost, and safety. However, we also show that part of this battery problem is that those influential goals are overly ambitious compared to goals derived from consumers’ PHEV designs. We elicited PHEV designs from potential early buyers among U.S. new car buyers; most of those who are interested in a PHEV are interested in less technologically advanced PHEVs than assumed by experts. Using respondents’ PHEV designs, we derive peak power density and energy density requirements and show that current battery chemistries can meet them. By assuming too aggressive PHEV goals, existing policy initiatives, battery research, and vehicle development programs mischaracterize the batteries needed to start commercializing PHEVs. To answer the question whether batteries are ready for PHEVs, we must first answer the question, “whose PHEVs?”     

A Brief Survey of Modern Optimization for Statisticians

Modern computational statistics is turning more and more to high‐dimensional optimization to handle the deluge of big data. Once a model is formulated, its parameters can be estimated by optimization. Because model parsimony is important, models routinely include non‐differentiable penalty terms such as the lasso. This sober reality complicates minimization and maximization. Our broad survey stresses a few important principles in algorithm design. Rather than view these principles in isolation, it is more productive to mix and match them. A few well‐chosen examples illustrate this point. Algorithm derivation is also emphasized, and theory is downplayed, particularly the abstractions of the convex calculus. Thus, our survey should be useful and accessible to a broad audience.     

Value Orientations, Income and Displacement Effects, and Voluntary Contributions

Identifying the value orientations of subjects participating in market or non-market decisions by having them participate in a ring game may be helpful in understanding the behaviour of these subjects. This experiment presents the results of changes in the centre and the radius of a value orientations ring in an attempt to discover if the measured value orientations exhibit income or displacement effects. Neither significant income effects nor displacement effects are identified. An external validity check with a voluntary contribution game provides evidence that value orientations from rings centred around the origin of the decision-space explain significant portions of voluntary contributions while value orientations from displaced rings do not.