About: Managing spillovers: an endogenous sunk cost approach

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rdf:type	skos:Concept http://linked.opendata.cz/ontology/domain/vavai/Vysledek
rdfs:seeAlso	http://www.cerge-ei.cz/pdf/wp/Wp472.pdf
Description	We introduce spillover effect into John Sutton.s (1991,1998) concept of endogenous sunk costs. These sunk costs appear in the form of R&D investment into quality in our framework. We show that with spillovers increasing and the effectiveness of investment in raising quality decreasing, the Sutton lower bound on concentration for an industry decreases and ultimately collapses to zero when spillovers are large enough and/or effectiveness of investment in raising quality is low enough. In the second part, we allow firms to protect their investment against spillovers. We focus on symmetric pure strategy Nash equilibria, where all firms either protect their investment or do not protect at all. Contrary to the result with exogenous spillovers assumed in the first part, in the second part of the paper we show that higher ex ante spillovers and/or lower effectiveness of investment in raising quality may induce firms to protect themselves against spillovers, leading to higher investment in quality, and to more concentrated market structure. Thus, the Sutton’s result on the concentration bound is preserved, if we allow firms to manage spillovers via private protection. We introduce spillover effect into John Sutton.s (1991,1998) concept of endogenous sunk costs. These sunk costs appear in the form of R&D investment into quality in our framework. We show that with spillovers increasing and the effectiveness of investment in raising quality decreasing, the Sutton lower bound on concentration for an industry decreases and ultimately collapses to zero when spillovers are large enough and/or effectiveness of investment in raising quality is low enough. In the second part, we allow firms to protect their investment against spillovers. We focus on symmetric pure strategy Nash equilibria, where all firms either protect their investment or do not protect at all. Contrary to the result with exogenous spillovers assumed in the first part, in the second part of the paper we show that higher ex ante spillovers and/or lower effectiveness of investment in raising quality may induce firms to protect themselves against spillovers, leading to higher investment in quality, and to more concentrated market structure. Thus, the Sutton’s result on the concentration bound is preserved, if we allow firms to manage spillovers via private protection. (en)
Title	Managing spillovers: an endogenous sunk cost approach Managing spillovers: an endogenous sunk cost approach (en)
skos:prefLabel	Managing spillovers: an endogenous sunk cost approach Managing spillovers: an endogenous sunk cost approach (en)
skos:notation	RIV/00216208:11640/12:00384391!RIV14-GA0-11640___
http://linked.open...avai/riv/aktivita	I P
http://linked.open...avai/riv/aktivity	I, P(GAP402/12/0961)
http://linked.open...vai/riv/dodaniDat	2014
http://linked.open...aciTvurceVysledku	Žigić, Krešimir
http://linked.open.../riv/druhVysledku	O - Ostatní výsledky nezařaditelné do žádného z výše uvedených druhů výsledku
http://linked.open...iv/duvernostUdaju	S - Úplné a pravdivé údaje nepodléhající ochraně podle zvláštních právních předpisů
http://linked.open...titaPredkladatele	Univerzita Karlova v Praze / Centrum pro ekonomický výzkum a doktorská studia
http://linked.open...dnocenehoVysledku	148010
http://linked.open...ai/riv/idVysledku	RIV/00216208:11640/12:00384391
http://linked.open...riv/jazykVysledku	eng - angličtina
http://linked.open.../riv/klicovaSlova	endogenous sunk costs; knowledge spillovers; innovations (en)
http://linked.open.../riv/klicoveSlovo	innovations endogenous sunk costs knowledge spillovers
http://linked.open...ontrolniKodProRIV	[0ECBFF3F12D1]
http://linked.open...in/vavai/riv/obor	AH
http://linked.open...ichTvurcuVysledku	1 (xsd:int)
http://linked.open...cetTvurcuVysledku	2 (xsd:int)
http://linked.open...vavai/riv/projekt	Managing R&D spillovers and IPR violation in oligopolistic markets: some theoretical and empirical considerations
http://linked.open...UplatneniVysledku	2012
http://linked.open...iv/tvurceVysledku	Žigić, Krešimir Senyuta, O.
http://localhost/t...ganizacniJednotka	11640

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