Limits
Competition, Product Proliferation and Welfare: A Study of the US Smartphone Market
Ying Fan & Chenyu Yang
American Economic Journal: Microeconomics, forthcoming
Abstract:
This paper studies (1) whether, from a welfare point of view, oligopolistic competition leads to too few or too many products in a market, and (2) how a change in competition affects the number and the composition of product offerings. We address these two questions in the context of the U.S. smartphone market. Our findings show that this market contains too few products and that a reduction in competition decreases both the number and variety of products. These results suggest that product choice adjustment may exacerbate the welfare effect of a merger.
The Local Residential Land Use Regulatory Environment Across U.S. Housing Markets: Evidence from a New Wharton Index
Joseph Gyourko, Jonathan Hartley & Jacob Krimmel
NBER Working Paper, December 2019
Abstract:
We report results from a new survey of local residential land use regulatory regimes for over 2,450 primarily suburban communities across the U.S. The most highly regulated markets are on the two coasts, with the San Francisco and New York City metropolitan areas being the most highly regulated according to our metric. Comparing our new data to that from a previous survey finds that the housing bust associated with the Great Recession did not lead any major market that previously was highly regulated to reverse course and deregulate to any significant extent. Moreover, regulation in most large coastal markets increased over time.
Your Uber has Arrived: Ridesharing and the Redistribution of Economic Activity
Caitlin Gorback
University of Pennsylvania Working Paper, November 2019
Abstract:
This paper studies how improvements in local accessibility influence cities’ distributions of economic activity. Exploiting UberX’s entry interacted with a location’s prior accessibility, I measure how local economic activity responds to changes in access. After ridesharing’s entry, restaurant net creation doubles in previously inaccessible locations, from 5% to 10%. As these areas open up and become more attractive, the median house price rises by 4% and rents rise by 1%. I quantify the impacts of these changes on welfare using a spatial equilibrium framework. Resident welfare depends on the trade-off between accessibility and amenity benefits versus housing costs. In the post-period, all residents benefit from ridesharing’s entry. Homeowners are willing to pay $1,060 per year for ridesharing’s entry, as user costs fall. Renters are willing to pay $430, as they do not realize capital gains.
Comparing meta-analyses and preregistered multiple-laboratory replication projects
Amanda Kvarven, Eirik Strømland & Magnus Johannesson
Nature Human Behaviour, forthcoming
Abstract:
Many researchers rely on meta-analysis to summarize research evidence. However, there is a concern that publication bias and selective reporting may lead to biased meta-analytic effect sizes. We compare the results of meta-analyses to large-scale preregistered replications in psychology carried out at multiple laboratories. The multiple-laboratory replications provide precisely estimated effect sizes that do not suffer from publication bias or selective reporting. We searched the literature and identified 15 meta-analyses on the same topics as multiple-laboratory replications. We find that meta-analytic effect sizes are significantly different from replication effect sizes for 12 out of the 15 meta-replication pairs. These differences are systematic and, on average, meta-analytic effect sizes are almost three times as large as replication effect sizes. We also implement three methods of correcting meta-analysis for bias, but these methods do not substantively improve the meta-analytic results.
Spillover Effects of IP Protection in the Inter-war Aircraft Industry
Walker Hanlon & Taylor Jaworski
NBER Working Paper, November 2019
Abstract:
Can granting IP protection to producers of one good affect the innovation rate in other related goods? To answer this question we exploit a unique policy experiment in the inter-war military aircraft industry. Airframe designs had little IP protection before 1926, but changes passed by Congress in 1926 provided airframe manufacturers with enhanced property rights over the new designs they produced. We show that granting property rights to airframe producers increased innovation in airframes, but slowed down innovation in aero-engines, a complementary good where there was no change in the availability of IP protection. We propose and test a simple theory that explains these patterns.
How Do Patent Incentives Affect University Researchers?
Lisa Larrimore Ouellette & Andrew Tutt
International Review of Law and Economics, forthcoming
Abstract:
Universities and other beneficiaries of public funding for scientific research are encouraged to patent resulting inventions under the Bayh–Dole Act. This controversial framework gives academic grant recipients a direct financial stake in the success of their inventions by requiring universities to share the resulting patent royalties with inventors. This incentive for grant recipients might help justify Bayh–Dole patents when the conventional justification for exclusivity — that it is necessary for commercialization — fails to hold. But there is little evidence as to whether it works. This article examines how one aspect of the patent incentive — the prospect of royalties — affects the behavior of university researchers. Fortuitously, different schools offer inventors different shares of patent revenue. We have created a dataset of royalty-sharing policies from 152 universities, which shows substantial variation across universities and time. (For example, Caltech switched from sharing 15% to 25% of net income in 1994, the University of Washington switched from sharing 100% of initial revenues to a flat rate of 33% in 2004, and the University of Iowa switched from 25% to 100% of initial patent revenues in 2005.) Although prior work has reported that higher inventor royalties lead to more university licensing income, we show that this result was driven by coding errors. We also extend prior work by examining more years, doing a more convincing panel data analysis, using additional outcome variables, and looking at lateral moves by the most active patenters. In all of these analyses we find no compelling empirical evidence that increasing university inventors’ royalty share has a significant effect on any of the outcomes one would expect to be most affected. These results do not imply that patents provide no incentives to university researchers. They may provide reputational benefits or encourage faculty-run spin-offs, or even provide financial incentives that are not captured by our statistics. But the lack of a measurable impact of higher royalty shares on patenting activity suggests that, from a social welfare perspective, it may be preferable for a larger share of royalties to be retained by universities, which are then required by Bayh–Dole to reinvest this money in science research and education. In any event, our analysis raises promising questions for future research and calls into question the existing view that increasing the inventor’s share in university patent policies encourages researchers to develop and commercialize more remunerative patents.
Do Venture Capitalists Stifle Competition?
Xuelin Li, Tong Liu & Lucian Taylor
University of Pennsylvania Working Paper, December 2019
Abstract:
We find that common ownership leads venture capital (VC) firms to stifle competition among startups, but only in limited circumstances. Our evidence is from pharmaceutical startups, where common ownership is widespread: 39% of startups share a VC with a close competitor. After a startup sees a close competitor make progress on a new drug project, the startup is less likely to advance its own project, and less likely to obtain VC funding, if the two startups share a common VC. These anticompetitive effects, however, are concentrated in markets with few competitors, VCs with larger equity stakes, and projects with similar technologies.