Mitsuru Igami

Estimating the Innovator's Dilemma: Structural Analysis of Creative Destruction in the Hard Disk Drive Industry, 1981-1998

This paper studies strategic industry dynamics of creative destruction in which firms and technologies experience turnover. Theories predict that cannibalization between existing and new products delays incumbents’ innovation, whereas preemptive motives accelerate it. Incumbents’ cost (dis)advantage relative to that of entrants would further reinforce these tendencies. To empirically assess these three forces, I estimate a dynamic oligopoly model using a unique panel data set of hard disk drive manufacturers. The results suggest that despite strong preemptive motives and a substantial cost advantage over entrants, cannibalization makes incumbents reluctant to innovate, which can explain at least 57 percent of the incumbent-entrant innovation gap.

Unobserved Heterogeneity in Dynamic Games: Cannibalization and Preemptive Entry of Hamburger Chains in Canada

We study cannibalization and preemption in the evolution of market structure. Because a market can accommodate only a finite number of products/outlets, forwardlooking firms face the tradeoff between cannibalization and preemption. We develop a dynamic entry model of multi-product oligopoly, and estimate it using data on hamburger shops in Canada (1970–2005). The results suggest cannibalization is the main determinant of profit and entry. Moreover, counterfactual simulations imply preemptive motives generate highly nonlinear entry strategies, and caution against the use of static approaches when market structure is evolving.We develop a dynamic entry model of multi-store oligopoly with heterogeneous markets, and estimate it using data on hamburger chains in Canada (1970-2005). Because more lucrative markets attract more entry, firms appear to favor the presence of more rivals. Thus unobserved heterogeneity across geographical markets creates an endogeneity problem and poses a methodological challenge in the estimation of dynamic games, which we address by combining the procedures proposed by Kasahara and Shimotsu (2009), Arcidiacono and Miller (2011), and Bajari, Benkard, and Levin (2007), respectively. The results suggest the omission of unobserved market heterogeneity attenuates the estimates of competition, and the tradeoff between cannibalization and preemption is an important factor behind the evolution of market structure.

Market Power in International Commodity Trade: The Case of Coffee

This paper studies the impact of international market structure on commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market in order to measure how successful a cartel treaty was and to assess its global welfare consequences. The results suggest that the International Coffee Agreement (ICA, 1965–89) raised price by 73 percent, annually transferring approximately 8 billion dollars from consumers to exporting countries, and its lapse in 1989 explains four-fifths of the subsequent price decline. I then discuss implications for public policies and the analysis of other international commodity markets.

Patent Statistics as an Innovation Indicator? Evidence from the Hard Disk Drive Industry

We assess the usefulness of patent statistics as an indicator of innovation using a direct measure of innovation in the hard disk industry (1976–98). Three findings emerge: (1) patents “predict” innovations better than a random guess, and a simple refinement makes them more useful; (2) conditional on innovating, conglomerates and larger firms patent more than specialized startups and smaller firms; and (3) patent reforms seem to make the patent-innovation relationship nonstationary. These results suggest researchers to use caution when comparing patents of different types of firms and across years because ill-informed R&D policy interventions may entail detrimental impacts on economic growth and welfare.

Market Power in International Commodity Trade: The Case of Coffee: Market Power in International Commodity Trade

This paper studies the impact of market power on international commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences. The results suggest that the International Coffee Agreement (ICA, 1965–89) raised its price by 75% above the Cournot�?competitive level, annually transferring approximately

Does Big Drive Out Small

12 billion from consumers to exporting countries, and its lapse in 1989 explains four�?fifths of the subsequent price decline, that is, the ‘coffee crisis.’