Carmine Ornaghi

Competition & Innovation: New Evidence from US Patent and Productivity Data

Is there any evidence that innovation and technological progress are contained by competition and fostered by monopoly power? Our results based on a newly constructed dataset of US manufacturing industries observed over two decades suggest that this is not the case.On the contrary, using both patent statistics and productivity growth as alternative measures of innovation and technical change, we observe faster technological advances in more competitive markets. These results are robust to changes in the econometric techniques used to model nonlinearity in the competition-innovation relationship and to the inclusion of non-manufacturing industries in the estimation sample.

Competition in the Pharmaceutical Industry: How do Quality Differences Shape Advertising Strategies?

We present a Hotelling model of price and advertising competition between prescription drugs that differ in quality/side effects. Promotional effort results in the endogenous formation of two consumer groups: brand loyal and non-brand loyal ones. We show that advertising intensities are strategic substitutes, with the better quality drugs being the ones that are most advertised. This positive association stems from the higher rents that firms can extract from consumers whose brand loyalty is endogenously determined by promotional effort. The models main results on advertising and pricing strategies are taken to the data. The latter consists of product level data on prices and quantities, product level advertising data, as well as the qualitative information on drug quality contained in the Orange Book compiled by the Food and Drug Administration (FDA). The empirical results provide strong support to the models predictions.

Using Proxy Variables to Control for Unobservables When Estimating Productivity: A Sensitivity Analysis

The use of proxy variables to control for unobservables when estimating a production function has become increasingly popular in empirical works in recent years. The present paper aims to contribute to this literature in three important ways. First, we provide a structured review of the different estimators and their underlying assumptions. Second, we compare the results obtained using different estimators for a sample of Spanish manufacturing firms, using definitions and data comparable to those used in most empirical works. In comparing the performance of the different estimators, we rely on various proxy variables, apply different definitions of capital, use alternative moment conditions and allow for different timing assumptions of the inputs. Third, in the empirical analysis we propose a simple (non-graphical) test of the monotonicity assumption between productivity and the proxy variable. Our results suggest that productivity measures are more sensitive to the estimator choice rather than to the choice of proxy variables. Moreover, we find that the monotonicity assumption does not hold for a non-negligible proportion of the observations in our data. Importantly, results of a simple evaluation exercise where we compare productivity distributions of exporters versus non-exporters shows that different estimators yield different results, pointing to the importance of making suitable timing assumptions and choosing the appropriate estimator for the data at hand.

ON THE DETERMINANTS OF TOTAL FACTOR PRODUCTIVITY GROWTH: EVIDENCE FROM SPANISH MANUFACTURING FIRMS

This paper explores the main determinants of productivity growth. The analysis is performed using Spanish firm-level data. We define a framework where the relative magnitudes of alternative, but not exclusive, sources of technical change are simultaneously estimated. Our main finding is that the average total factor productivity (TFP) growth is fully explained by embodied technical progress (i.e., either new capital goods or human capital). Our results contradict the existence of a positive contribution of economywide neutral technological progress in determining average TFP growth. They also leave little room for large, unpriced effects external to the firm, both at the aggregate and at the industry level. We find evidence of firm-specific learning by doing, short-lived and due to adoption of new processes.

Positive Assortive Merging

This paper addresses the following two questions: (i) Is there any evidence that firms, like human beings, prefer to partner with alike? (ii) Is there any relationship between the ex ante technological and product relatedness of merging parties and the postmerger performances? Using data of patent holdings and product portfolios of big pharmaceutical companies, I find that (i) merger deals are more likely to be signed between firms with related technologies and drug portfolios, and (ii) product relatedness and technology relatedness are positively and negatively correlated with postmerger performances, respectively. The analysis suggests that the negative effect of technology relatedness might be driven by a large human capital depreciation following consolidations. The results have important implications for competition policy, which are discussed in the concluding section.

Camera-based window-opening estimation in a naturally ventilated office

ABSTRACT Naturally ventilated offices enable users to control their environment through the opening of windows. Whilst this level of control is welcomed by users, it creates risk in terms of energy performance, especially during the heating season. In older office buildings, facilities managers usually obtain energy information at the building level. They are often unaware or unable to respond to non-ideal facade interaction by users often as a result of poor environmental control provision. In the summer months, this may mean poor use of free cooling opportunities, whereas in the winter space heating may be wasteful. This paper describes a low-cost, camera-based system to diagnose automatically the status of each window (open or closed) in a facade. The system is shown to achieve a window status prediction accuracy level of 90–97% across both winter and summer test periods in a case study building. A number of limitations are discussed including winter daylight hours, the impact of rain, and the use of fixed camera locations and how these may be addressed. Options to use this window-opening information to engage with office users are explored.