2002 – Berlin

Annual Meeting of the Committee for Industrial Economics, 11–12 March, 2002

Topic: Economics of Networks

Sunday, 10 March, 2002

  • from 7.30 pm: Get together at Ristorante "La Fattoria"

Monday, 11 March, 2002

  • 8.30 - 8.45 am: Welcome by the Chair Prof. Rolf Bühner and the Host Prof. Klaus Zimmermann
  • 8.45 - 10.00 am: Günter Knieps, "Competition on the European Transport Markets: The Problem of Network Access."

Discussants: Peter Zweifel, Michael Fritsch

  • 10.00 - 10.30 am: Coffee Break
  • 10.30 - 11.45 am: Klaus Schöler, "Alternative Organization of Two-stage Power Markets."

Discussants: Anette Boom, Hans-Joachim Hofmann

  • 11.45 am - 1.00 pm: Karl Morasch, "Electronic Coordination in Oligopoly Markets: Impact on Transport Costs and Product Differentiation."

Discussants: Siegfried Berninghaus, Hans Jürgen Ramser

  • 1.00 - 2.15 pm: Lunch
  • 2.15 - 3.30 pm: Armin Schmutzler, "Infrastructure Quality in Deregulated Industries: Is there an Underinvestment Problem?"

Discussant: Georg Götz

  • 3.30 - 4.00 pm: Coffee Break
  • 4.00 - 5.15 pm: Konrad Stahl, "Global vs. local competition: the case of e-commerce"

We analyze the impact of increased outside options brought to consumers by e-commerce on the classical retail market. If consumers have to choose once where to shop we show that under all forms of organizing the classical retail market, increased competition from ecommerce will crowd out variety in the retail market. However, the effect of increased competition on prices is much less clear. While it yields a price reduction under monopoly, prices increase under oligopoly. If consumers can shop in e-commerce after having bene…ted from inspection in the retail market, the monopoly will increase varieties in response to a decrease in prices in e-commerce.

Discussants: Bernd Woeckener, Helmut Zink

  • 5.15 - 6.30 pm: Christian Wey, "Incentives for Takeover in Oligopoly"

This paper presents a model of takeover incentives in an oligopolistic industry, which, in contrast to previous approaches, takes both insiders. and outsiders. Gains from an increase in industry concentration into account. Our main application is to compare takeover incentives in a differentiated Cournot and Bertrand oligopoly model with linear demand and costs. We provide a complete analysis for arbitrary numbers of Þrms, complements and substitutes, and degrees of product differentiation. An increase in concentration is more likely under Cournot competition if products are complements and more likely under Bertrand competition if products are substitutes. Moreover, as products become closer substitutes, a takeover becomes more likely under Bertrand and less likely under Cournot competition.

Discussants: Ulrich Kamecke, Jürgen Weigand

  • 6.30 - 7.15 pm: General assembly
  • from  8.00 pm: Get-together at Restaurant "Alcatraz"

Tuesday, 12 March, 2002

  • 8.30 - 9.45 am: Heidrun Hoppe, "Innovation in Intermediation"

This paper offers a new theoretical framework to study the organization of innovation investments. Our main finding is that intermediaries between creators and potential users of new technology can allow users to economize on a critical component of innovation investment decisions - the expertise to overcome the problem of sorting 'profitable' inventions from'unprofitable' ones. Using a model of university-industry technology transfer, we identify two conditions under which intermediation in innovation become viable: first, success-based compensation schemes must be feasible, and second, the size of the invention pool must be succinctly large. The analysis suggests that intermediation in innovation involves substantial economies of scale. The findings of our model are consistent with empirical evidence. They can also help frame government intervention with regard to adoption of new technology.

Discussant: Alexander Karmann

  • 9.45 - 11.00 am: Thomas Gehrig, "Introductory Offers in a Model of Strategic Competition"

We show how introductory offers emerge endogenously under conditions of competition in markets with switching costs. In a standard Hotelling model we find the combination of switching costs and introductory discounts to reduce industry profits relative to industries without switching costs, in which introductory offers do not emerge. Thus, our analysis offers a formalized argument for the policy conclusion that the strategic use of introductory offers should be promoted, not banned, in environments where firms are able to discriminate across different vintages of customers.

Discussants: Hans Gersbach, Gerhard Illing

  • 11.00 - 11.30 am: Coffee Break
  • 11.30 - 12.45 am: Günter Lang, "The Impact of R&D Expenditures on Productivity Growth"

Motivated by the observed reversal in labor productivity growth since the beginnings of the nineties, this paper is analyzing the relationship between R&D expenditures and productivity. Time series data of the German manufacturing industry are used to estimate a variable cost function, with the stock of knowledge being modeled as a quasifix input. R&D is found to be a significant determinant of productivity. More interestingly, the estimates show that the extracted yield is non-constant over the observation period. Current rates of return on own R&D are measured to be significantly lower than during the sixties. The long-term elasticity of production costs with respect to R&D reduced from about –0.08 to just -0.01, the elasticity of labor demand from about –0.35 to -0.15. Since the growth rates of real R&D were also declining, even got negative during the last years, the contribution of R&D to productivity growth is currently near to the lowest level since 1960.

Discussants: Thusnelda Tivig, Dietmar Harhoff

  • 12.45 am: Conclusion and end of meeting