Labour migration in the enlarged EU: a new economic geography approach

This paper studies the impact of migration policy liberalisation on international labour migration in the enlarged European Union (EU) in a structural economic geography approach. The liberalisation of migration policy would induce an additional 1.80–2.98% of the total EU workforce to change their country of location, with most of migrant workers relocating from the East to the West. The average net migration rate is decreasing in the level of integration, suggesting that from an economic point of view no regulatory policy responses are necessary to labour migration in the enlarged EU.     

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.     

The trade-off between innovation and defense industrial policy: A simulation model analysis of the Norwegian defense industry

The paper investigates the trade-off between innovation and defense industrial policy. It presents an agent-based simulation model calibrated for the Norwegian defense industry that compares different policy scenarios and examines the effects of a pending EU market liberalization process. The paper points to two main results. (1) It finds that a pure scenario where national authorities focus on, and provide support exclusively for, either a) international competitiveness or b) national defense and security objectives, is more Pareto efficient than a corresponding mixed strategy where policy makers simultaneously pursue both international competitiveness and defense and security objectives. (2) Under the conditions of the new EU liberalization regime, it finds that a stronger and more visible trade-off will emerge between international competitiveness and national defense and security objectives. Policy makers will have to choose which to prioritize, and set a clear agenda focusing on one of the two objectives.     

Public goods in directed networks

We study the provision of a public good in a social network where links are directed, i.e., the information flows one way. Our results relate, through stochastic dominance, the equilibrium outcome of such a process with the out-degree distribution of the network.     

Editorial

This paper presents an overview of issues for future research. as identified by the papers appearing in the Special Issue on Innovation in Telecommunications. To this end. we elaborate upon the emergence of a new innovation regime in telecommunications, discuss the performance and sustainability of this new innovation regime, and reflect upon institutional choices for the regime and accompanying policy options. Further research on innovation in telecommunications is advocated, taking up a broad range of issues, including long-term industrial evolution and sustainability concerns in a wide sense.     

Analysing The Evolution Of Industry: The Relevance Of The Telecommunications Industry

This paper analyses the fundamental forces involved in the evolution of the telecommunications industry. It is suggested that there are five major forces that together drive the evolution of this industry: specialisation, competition, financial markets. endogenous consumer demand and permeable industry boundaries. An important research task is to further elaborate on the boundaries of not only the industry but of the industrial system taken as a whole.     

Structural Change And Innovation In U.S. Telecommunications

This paper reexamines broadly. from the standpoint of innovation, the arguments for vertical integration in the U.S. telecommunications industry in light of structural change since the breakup of the Bell System. While basic and applied research became the casualty of the 1984 breakup and the 1995 AT&T split, there is no evidence that the pace of innovative activity and productivity has slowed. Evidence from R&D and patent data suggests some acceleration of innovative activity. However. the service segment of the industry ceased to be the center of technological innovation. The source of future innovation seems to lie in the telecommunications and Internet equipment firms and independent software firms. The emergence of the competitive stand-alone software industry, combined with a trend towards open operating systems and customer demand for greater flexibility, and growing substitution of technology alliances for in-house R&D appear to have undermined the case for vertical integration in the telecommunications industry. From the standpoint of business strategy, the question of whether a firm like AT&T, notwithstanding its huge investments in cable facilities, can develop distinctive and sustainable capabilities through horizontal expansion and ubiquity and one-stopshopping marketing alone remains open.     

SPECTRUM LICENSING AND FLEXIBLE BEAUTY CONTEST DESIGNS

McMillan's (1995) ‘flexibility’ proposition suggests a testable hypothesis about beauty contests spectrum assignments. Such flexibility purportedly allows regulators to pursue social welfare (network deployment) goals. A separate argument is that more competitive beauty contests enhance the probability of assignment. The study concludes that regulators do indeed focus on societal (network deployment) welfare goals. Initially, consideration is given in the immediate term where licenses are awarded based on operator aftermarket commitments. Subsequently, spectrum package attributes and financial performance obligations, specified in the tender documents, come into play to support the networks spread more widely through the population in a timely manner. Finally, the econometric results suggest that more competitive beauty contests enhance the probability of assignment.     

Influence Of Over‐ And Underconfidence On A Marriage Market*

This paper examines misconfidence (over‐ or underconfidence) and marriage proposal strategies in a two‐sided search model with non‐transferable utility. Single agents are vertically heterogeneous—there exists a ranking of marital charm (types). It is shown that there are two externalities to over‐ or underconfident behaviour: someone's over‐ or underconfidence affects: (i) the duration of search for others who directly meet over‐ or underconfident agents; and (ii) the marriage decision of others who directly or indirectly meet over‐ or underconfident agents. Furthermore, these externalities prevent the lowest‐type agents from marrying in an equilibrium.     

Industry dynamics: Foundations for models with an infinite number of firms

This paper explores the connection between three important threads of economic research offering different approaches to studying the dynamics of an industry with heterogeneous firms. Finite models of the form pioneered by Ericson and Pakes (1995) capture the dynamics of a finite number of heterogeneous firms as they compete in an industry, and are typically analyzed using the concept of Markov perfect equilibrium (MPE). Infinite models of the form pioneered by Hopenhayn (1992), on the other hand, consider an infinite number of infinitesimal firms, and are typically analyzed using the concept of stationary equilibrium (SE). A third approach uses oblivious equilibrium (OE), which maintains the simplifying benefits of an infinite model but within the more realistic setting of a finite model. The paper relates these three approaches. The main result of the paper provides conditions under which SE of infinite models approximate MPE of finite models arbitrarily well in asymptotically large markets. Our conditions require that the distribution of firm states in SE obeys a certain “light-tail” condition. In a second set of results, we show that the set of OE of a finite model approaches the set of SE of the infinite model in large markets under a similar light-tail condition.