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INNOVATION COMPLEMENTARITIES AND SCALE OF PRODUCTION
(Click above to download a pdf copy of the paper)
- Abstract: We present an econometrically feasible model that uses the information contained in the innovation profile of each firm to test for
the existence of complementarity among production and innovation
strategies. Our approach is able to distinguish between complementarity
and correlation induced by unobserved heterogeneity. We apply the model
to analyze the Spanish ceramic tiles industry where the adoption of the
single firing furnace in the 1980s facilitated the introduction of new
product designs as well as to opening new ways of organizing production.
Our econometric results show that there is significant complementarity
between product and process innovation. Small firms tend to be more
innovative overall.
- Co-author: José C. Pernías (LINEEX, Universidad de Valencia).
- Publication: The Journal of Industrial Economics, 54, 1-29 (lead article), March 2006.
- JEL: C52, L20, O32.
- First version: November 1998.
- Final version: January 2005.
- Funding: INSEAD research project 2010-5339R; C.V. Starr Center for Applied Economics at NYU; University of Pennsylvania Research Foundation.
- Seminars: Arizona State University; Instituto de Análisis Económico; University of Michigan; New York University; Universidad Politécnica de Cartagena; Rice University.
- Conferences: WZB conference on "Empirical Advances in Industrial
Organization," Berlin, 1997; NBER-Universities Research
Conference on "Competition and Organization in Technology-Intensive
Industries," Boston, 1997; CIRANO conference on "Innovation
and Supermodularity," Montreal, 2000; "First International
Industrial Organization Conference," Boston, 2003;
European Summer Symposium in Economic Theory, Gerzensee, 2005.
- Presentations: PPT; PDF.
- Noteworthy: Previously circulated as C.V. Starr Center Research Report #98-42 and CEPR DP No. 4483.
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