...funding research, sharing discoveries.
Enrico Pennings
professor of applied industrial economics, Erasmus University Rotterdam
Sign in to message-
Open Access publications from Katholieke Universiteit Leuven 2010 Feb;
International trade with heterogenous firms and asymmetric product varieties
We extend the Melitz-Ottaviano (2008) model by introducing asymmetric groups of varieties in terms of degree of product differentiation. The introduction of these different market segments in the demand system allows us to structurally derive more co... expand abstractmplex relations between firm productivity, size and markups, which ultimately depend on the degree of product differentiation, for both the closed and open economy settings. The theoretical results are tested at the empirical level by comparing the performance of French wine producers in market segments characterized by heterogeneous levels of product differentiation, defined geographically based on the "Denomination of Controlled Origin" areas. collapse abstract
0 comments -
Research Policy 2010 Feb; 39(6)
Learning dynamics in research alliances: A panel data analysis
The aim of this paper is to empirically test the determinants of Research Joint Ventures' (RJVs) group dynamics. We develop a model based on learning and transaction cost theories, which represent the benefits and costs of RJV participation, respecti... expand abstractvely. According to our framework, firms at each period in time weigh the benefits against the costs of being an RJV member. RJV dynamics can then be interpreted as a consequence of this evolving trade-off over time. We look at entry, turbulence and exit in RJVs that have been set up under the US National Cooperative Research Act, which allows for certain antitrust exemptions in order to stimulate firms to co-operate in R&D. Accounting for unobserved project characteristics and controlling for inter-RJV interactions and industry effects, the Tobit panel regressions show the importance of group and time features for an RJVs evolution. We further identify an average RJVs long-term equilibrium size and assess its determining factors. Ours is a first attempt to produce robust stylized facts about co-operational short- and long-term dynamics, a neglected dimension in research co-operations, but an important element in understanding how collaborative learning works. collapse abstract
0 comments -
Tinbergen Institute Discussion Papers 2009 Feb;
Horizontal Multinational Firms, Vertical Multinational Firms and Domestic Investment
We build a dynamic general equilibrium model with 2 countries, horizontal and vertical multinational activity and endogenous domestic and foreign investment. It is found that horizontal multinational activity always leads to a complementary relations... expand abstracthip between domestic and foreign investment. Vertical multinational activity, in contrast, leads to either a substitutional or complementary relationship between domestic and foreign investment, depending on the firms' technologies. We test the theoretical implications with a panel of U.S. multinationals and find empirical support. collapse abstract
0 comments -
TABLE OF TABLES....................................................................................................................... 3
implications of globalization for the definition of the relevant
0 comments -
International Journal of Industrial Organization 2008 Feb; 26(5)
Learning from foreign investment by rival firms: Theory and evidence
No abstract is available for this item.
0 comments -
Journal of Comparative Economics 2008 Feb; 36(3)
Privatization of real options
Many privatization objects have characteristics of real options in the sense that a substantial investment is required in order to make the asset productive while at the same time there is uncertainty about the future value of the asset. This paper e... expand abstractxplores several auction designs for the privatization of such assets and shows how government revenues depend on the auction designs. As a benchmark, the paper analyzes revenues from an auction with cash only. It is demonstrated that a bid that includes a bidding firm's pledged investments at the time of investment as to stimulate regional development is inferior to a cash only bid. Investments which are made compulsory by the government at the time of the actual investment or retained shareholding by the government, both announced before the auction, can augment the government's payoff. Journal of Comparative Economics 36 (3) (2008) 489-497. collapse abstract
0 comments -
CIG Working Papers 2008 Feb;
On The Stability of Research Joint Ventures: Implications for Collusion
Though there is a body of theoretical literature on research joint venture (RJV) participation facilitating collusion, empirical tests are rare. Even more so, there are few empirical tests on the general theme of collusion. This note tries to fill th... expand abstractis gap by assuming a correspondence between the stability of research joint ventures and collusion. By using data from the U.S. National Cooperation Research Act, we show that large RJVs in concentrated industries are more stable and hence more suspect to collusion.
0 comments
ZUSAMMENFASSUNG - Trotz einer Vielzahl von theoretischen Studien, die zeigen, dass Kollusion durch Forschungsallianzen erleichtert werden kann, fehlen empirische Arbeiten, die diesen Zusammenhang bestätigen. Noch erstaunlicher ist die allgemein geringe Anzahl von empirischen Untersuchungen auf dem Forschungsgebiet der Kollusion. Dieser Aufsatz versucht diese Lücke zu schließen wobei unterstellt wird, dass ein Zusammenhang zwischen der Stabilität von Joint-Ventures und der Entstehung von Kollusionen besteht. Anhand von Daten des U.S. National Cooperation Research Act zeigen wir, dass große Forschungsallianzen in stark konzentrierten Branchen stabiler und daher eher der Absprache verdächtig sind. collapse abstract -
European Economic Review 2007 Feb; 51(5)
Corrigendum to "Tariffs, licensing and market structure": European Economic Review 50, (2006), 1699-1707)
No abstract is available for this item.
0 comments -
Industrial and Corporate Change 2007 Feb; 16(2)
Employee layoff under different modes of restructuring: exit, downsizing or relocation
Pressured by globalizing economies and growing international competition, an increasing number of firms are forced to rationalize productive operations. Especially poorly performing firms need to improve their profitability through downsizing or rel... expand abstractocating their operations, which in many cases causes collective employee layoffs. This article adds to the emergent literature on the consequences of downsizing by looking into the determinants of collective employee layoffs. Based on a unique sample of Belgian firms reporting collective layoffs this article analyzes the firm's decision to dismiss all employees (exit), a significant proportion of its employees without creating new employment elsewhere (downsizing), or to move production abroad (international relocation). We theoretically derive the conditions under which a firm prefers one strategy to another. The empirical results confirm that relocating firms are most profitable among the restructuring firms, have invested more in the recent past, operate in sectors with significant economies of scale and belong more often to a multinational group than firms opting for downsizing or exit. Downsizing firms are more capital intensive than relocating firms, while exiting firms are less profitable, smaller, younger, and more labor intensive than downsizing or relocating firms. Copyright 2007 , Oxford University Press. collapse abstract
0 comments -
Oxford Bulletin of Economics and Statistics 2006 Sep; 68(5)
The Hazard Rate of Foreign Direct Investment: A Structural Estimation of a Realoption Model
The hazard rate of investment is derived within a real-option model, and its properties are analysed so as to directly study the relation between uncertainty and investment. Maximum likelihood estimates of the hazard are calculated using a sample of ... expand abstractmultinational enterprises (MNEs) that invested in Central and Eastern Europe over the period 1990–98. Employing a standard, non-parametric specification of the hazard, our measure of uncertainty has a negative effect on investment, but the reduced-form model is unable to control for nonlinearities in the relationship. The structural estimation of the option-based hazard is instead able to account for the nonlinearities and exhibits a significant value of waiting, although the latter is independent of our measure of uncertainty. This finding supports the existence of alternative channels through which uncertainty can affect investment. collapse abstract
0 comments -
Scottish Journal of Political Economy 2006 Aug; 53(4)
INTERNATIONAL RELOCATION OF PRODUCTION: WHERE DO FIRMS GO?
The flexible relocation of capacity across countries by multinational enterprises has become an important source of concern. Using a unique sample of relocating firms in Belgium, we find that wages and market potential of host regions are important d... expand abstracteterminants for the location choice. Considering firm characteristics, we show that large firms have a higher propensity to relocate to remote countries. Public aid only plays a decisive role in the investment decision for relocations to adjacent countries, suggesting a potential harmful role in distorting competition. More proactive policies in line with changing comparative location advantages should be implemented to accommodate relocations. collapse abstract
0 comments -
European Economic Review 2006 Feb; 50(7)
Tariffs, licensing and market structure
No abstract is available for this item.
0 comments -
Journal of Economics 2005 Feb; 74(2)
Price or quantity setting under uncertain demand and capacity constraints: An examination of the profits
This article considers price formation and quantity setting of a capacity-constrained risk-neutral firm facing uncertain demand. It is shown that the optimal price of a price-setting risk-neutral monopolist decreases with demand uncertainty. With a s... expand abstracttrictly convex demand function expected profits increase with uncertainty for a quantity-setting monopolist whereas expected profits decrease for a price-setting monopolist. Furthermore, similar results on the effect of uncertainty are derived for a differentiated goods industry.Keywords pricing - capacity - uncertaintyJEL classification D42 - D81 collapse abstract
0 comments -
Tinbergen Institute Discussion Papers 2005 Feb;
Unionization Structure, Licensing and Innovation
Taking technological differences between firms as given, we show that the technologically advanced firm has a stronger incentive for technology licensing under a decentralized unionization structure than with centralized wage setting. Furthermore, We... expand abstract show that, in presence of licensing, the incentive for innovation may also be stronger under decentralized unions. Unions have a clear preference for centralization only if productivity improvements are relatively small. collapse abstract
0 comments -
Tinbergen Institute Discussion Papers 2005 Feb;
Testing for Marginal Spillovers from Foreign Direct Investment
We develop a simple test to assess whether horizontal spillover effects from multinational to domestic firms are endogenous to the market structure generated by the entry of the same multinationals. In particular, we analyze the performance of a pane... expand abstractl of 10,650 domestic and multinational firms operating in Romania in the period 1995-2001. Controlling for the simultaneity bias in productivity estimates through semi-parametric techniques, we find that changes in domestic firms’ TFP are positively related to the first foreign investment in a specific industry and region, but get significantly weaker and become negative as the number of multinationals that enter in the considered industry/region increases. We can thus recover evidence of changing marginal effects in domestic firms’ TFP, the sign of which depends on a specific threshold in the presence of foreign firms. collapse abstract
0 comments -
Journal of Economic Dynamics and Control 2005 Feb; 29(5)
How to maximize domestic benefits from foreign investments: the effect of irreversibility and uncertainty
No abstract is available for this item.
0 comments -
Open Access publications from Katholieke Universiteit Leuven 2005 Feb;
Employee lay-off under different modes of restructuring
In recent years, there has been a growing concern about the effect of globalisation on employment in most West European countries. More and more firms had to drastically restructure their operations in order to survive the rise in global competition.... expand abstract Restructuring often leads to a collective lay-off of employees. We use a theoretical model to examine how firm and industry characteristics have an impact on different modes of restructuring. (1) Close down part of its activities and relocate abroad, (2) Downsizing through a significant decrease in employees or (3) Dismiss all employees and exit the market. Using a unique sample of Belgian firms reporting collective layoffs, we test empirically the predictions of the model. Relocating firms are found to be most profitable among the restructuring firms, have invested more in the recent past, operate in sectors with significant economies of scale and belong more often to a multinational group than firms opting for downsizing or exit. Downsizing firms are more capital intensive than relocating firms, while exiting firms are less profitable, smaller, younger and more labour intensive than downsizing or relocating firms. collapse abstract
0 comments -
The Journal of Industrial Economics 2004 Nov; 52(4)
OPTIMAL PRICING AND QUALITY CHOICE WHEN INVESTMENT IN QUALITY IS IRREVERSIBLE
This paper examines the price and quality choice of a single product, risk-neutral monopolist who can delay irreversible investments required for market entry. It is shown that the price and quality she chooses at entry increase with uncertainty abou... expand abstractt the size of future demand. In a Stackelberg leader-follower game, the leader and follower pre-commit immediately up to a certain level of uncertainty. In this case the leader produces the higher quality good. When uncertainty is higher than this threshold, the follower will wait and enter the market later with a higher quality good. collapse abstract
0 comments -
Economic Modelling 2004 Feb; 21(6)
The choice and timing of foreign direct investment under uncertainty
No abstract is available for this item.
0 comments -
Working Papers 2003 Feb;
Oligopolistic Reaction to Foreign Investment in Discrete Choice Panel Data Models
We offer a simple explanation for oligopolistic reaction based on Bayesian learning by rival firms operating in an uncertain environment. We test the implications of the model through a discrete choice panel data sample of MNEs that have invested in ... expand abstractCentral and Eastern Europe over the period 1990-1997. Interacting the measure of rivals' investment in country-industry pairs with uncertainty we find strong evidence for oligopolistic reaction, especially through the channel of Bayesian learning postulated by the model. The findings are robust with respect to different model specifications. collapse abstract
0 comments -
Vlerick Leuven Gent Management School Working Paper Series 2002 Feb;
The V-shaped value evolution of Ramp;D-projects
On average the expected value at the moment of commercialization of an R&D project should remain constant during the different stages of new product development. Contrary to this intuition however, we find a systematic, non-constant pattern i... expand abstractn the average expected value of an R&D project. First, the value declines after the initial screening, then rises after the first market analysis, but on average does not reach the initial level at the final stage of development when resources for market introduction are approved. Moreover, uncertainty about the project value declines over time. The findings suggest a V-shaped value function of R&D projects. Our study seems to be a first attempt to make direct measurements of valuing R&D projects through time in a real managerial setting. collapse abstract
0 comments -
Vlerick Leuven Gent Management School Working Paper Series 2002 Feb;
The option value of developing two product standards simultaneously when the final standard is uncertain
This paper presents a framework for valuing managerial flexibility within the context of product standardization. The framework originates in a major standardization problem concerning digital tape recording at Philips Electronics. We use insights fr... expand abstractom financial option theory to calculate the option value of simultaneously developing two correlated product standards, and then compare this value to the option value of developing a single standard. We determine a threshold level such that for lower follow-on investment outlays development of both standards is optimal while for higher investment levels development of a single standard is optimal. This threshold is negatively related to the correlation between the value of the two standards. Finally, we show that properly incorporating uncertainty and the interdependence between the payoffs to the two standards leads to significantly different conclusions from standard NPV-analysis. collapse abstract
0 comments -
Open Access publications from Katholieke Universiteit Leuven 2002 Feb;
The reorganization decisions of troubled firms: exit, downscale or relocate
No abstract is available for this item.
0 comments -
R&D Management 2001 Mar; 31(2)
An option approach to the new product development process: a case study at Philips Electronics
The paper considers the product development process as a series of (real) options with reducing uncertainty over time. Criteria are developed to decide on speeding up or delaying the development process. The paper demonstrates how, in the R&D pha... expand abstractse, any particular project may be assigned within a 2 × 2 matrix of uncertainty versus R&D option value. A similar matrix can be established for the product launch phase. The matrices support portfolio management throughout the different phases of development and enable management to decide on an appropriate point at which to abandon individual projects. The approach originates from applying real options insights into the product development process at Philips Electronics. The paper is illustrated with some actual R&D projects. collapse abstract
0 comments -
Open Access publications from Katholieke Universiteit Leuven 2001 Feb;
Globalization and the definition of the relevant geographic market in antitrust practices
This paper starts from the antitrust practices in the European Community and the US with respect to the delineation of the relevant geographic market in dealing with concentrations and shows that relugations and guidelines at this moment focus almost... expand abstract exclusively on demand substitution. However, the process of globalization involves essentially global supply conditions and competition. A methodology is presented for delineating the relevant geographic market, that better takes this globalization trend into account and brings both demand and supply substitution better in balance. The practical use of the methodology is illustrated for the Volvo-Scandia merger case that was blocked by the European Commission in 1999. collapse abstract
0 comments
