101,908 research outputs found
Technology inertia and the benefits of entry
No full textWe study the effects of entry on price in an industry. This assessment is usually carried out under the implicit assumption of “technological inertia”: incumbents cannot change their technologies in response to entry. We remove this assumption by modeling a game where, before quantity competition, firms choose technologies. We identify parameter configurations where, after entry, the incumbent(s) changes technology. This leads either to a higher price after entry or to a “dampening effect” on price reduction. This effect is shown to be relevant when evaluating the welfare gains from measures intended to foster competition by increasing the number of
competitors. The converse proposition could be stated for evaluating the social costs of merger
Product Positioning and Incentives to Innovate
No full textThis paper shows that product positioning affects the incentives to invest in process innovation. The result is found using a model of price competition with three firms under horizontal product differentiation—and then extended to a more general Bertrand triopoly. The central firm may have a higher gain from a cost reduction than the peripheral firms, even if it reaps a lower profit or has a lower demand. By contrast, the peripheral firms have a larger gain if, and only if, they also have larger profits. Furthermore, we argue that the central firm exploits a reduction in the marginal cost mainly to expand its sales, whereas the peripheral ones to increase their markup. We finally show that the aggregate innovation incentives are larger the more clustered toward the center are the firms and the larger the preinnovation cost asymmetry. We also analyze the effects of mergers on innovation incentives, confirming that they tend to reduce the merged firms' incentives to innovate
DISCLOSING VERSUS WITHHOLDING TECHNOLOGY KNOWLEDGE IN A DUOPOLY
No full textWe study firms' incentives to transfer knowledge about production technology to a rival in a Cournot duopoly. In a setting where two technologies are available, a technology is characterized by its associated cost function and no single technology is strictly superior to the other. A firm has superior information if it knows both techniques and the other only one. Cost efficiency may be 'reversed' after the voluntary disclosure, so that the rival's costs are improved at the equilibrium level of output. Adding R&D investments to the picture, we find that a firm can decide to invest just for the purpose of acquiring knowledge that will be transferred and not used. Furthermore, for the same point in the parameter space, the acquisition of full knowledge may occur or not as a function of the initial distribution of information. Copyright � 2008 The Authors; Journal compilation � 2008 Blackwell Publishing Ltd and The University of Manchester.
Niche vs. central firms: Pattern of technology choice and cost-price dynamics in a differentiated oligopoly
No full textWe investigate whether and how positions in the characteristics space influences technological adoption and how price levels are affected; furthermore we assess the effects of policy interventions. In an industry where a central firm competes with two peripheral/niche ones, two technologies are available: one with low marginal and high fixed costs and one with opposite pattern. The central firm is in direct competition with the all the rivals. We show that this firm has higher incentives to adopt the technology efficient at large production scale; consequently if fixed cost decreases, the diffusion of this technology in the industry starts from the center and then spreads over to the niche firms. Changes in fixed and marginal costs affect long-run prices in non-obvious way. On the normative side, subsidies affect the technology pattern and deliver relevant effects: lump-sum subsidies increase consumer surplus, but can reduce profits. A price-cap that forestalls a technological change improves welfare. Our analysis is well-suited to analyze the digitalization process that has taken place in the last years
On the Effects of Entry under Flexible Production Techniques: An Example of Quasi-Anticompetitiveness
No full textWe study reactions to entry in a Cournot model, contrasting the case where firms are endowed with unchangeable technologies against that where technologies are flexible. By the latter we mean that firms
can change the installed production technique at zero cost (fully flexible
technologies). We show that when firms are technologically flexible,
entry can increase equilibrium prices. The analysis is cast in a short-
run time horizon to simplify exposition, but its predictive power may
better relate to the long run
Niche vs. central firms: Technology choice and cost-price dynamics in a differentiated oligopoly
No full textThis paper is about technology choices in a differentiated oligopoly. The main questions are: whether the position in the product space affects the choice of technology, how changes in fixed costs affect price outcomes, the strategic responses to policy interventions. The industry is an oligopoly where a central firm is competing with two peripheral (or marginal) ones. The former is shown to be more ready than the latter to adopt a technology with low marginal costs and high fixed costs (Increasing Returns to Scale) rather than one with the opposite pattern (Constant Returns to Scale). The fixed cost in the IRS affects the technology configuration and hence output prices. For instance, a lower fixed cost may trigger lower prices and it is neutral only for given technologies. A price-cap may forestall a change in technologies; nondiscriminatory ad-valorem tax and taxes on variable input, or discriminatory unit taxes can also affect the technology pattern and deliver important effects on prices
Employee-centric innovation: Integrating participatory design and video-analysis to foster the transition to Industry 5.0
No full textRecently, the paradigm of Industry 5.0 has been introduced to complement that of Industry 4.0, which turned out to be technology- rather than human-oriented. Industry 5.0 is meant to foster a transition toward a human-centric industry, where the worker's well-being is prioritized. To meet this goal, it is crucial to directly involve employees from the earliest stages of design project. In the present work, we describe a case study that was meant to re-design the technology used in a validation laboratory. We adopted a mixed-method approach integrating employee's self-reported data and objective event-based data from in-the-field video-analysis. By doing this we could build a thorough understanding of the work activities and of the related main issues. We then devised a list of re-design recommendations that were translated in a revised application and in the suggested introduction of portable devices. The outcomes of a preliminary usability evaluation of the revised application were promising, indicating the effectiveness of the methodological approach
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