This article examines differences in performance between private companies (POEs) and state owned enterprises (SOEs), with an emphasis on the effects of market structure. The study uses a comprehensive panel covering in principle all registered companies during the 1990s in Norway, a country where SOEs play an important role in regular markets. Return on assets as well as costs relative to sales revenue are used as measures of performance in markets where SOEs and POEs compete with each other. Overall, POEs perform significantly better than SOEs. The study tests the hypothesis that SOE managers may learn from POE managers in environments with stronger competition, but finds only weak empirical support for such a learning mechanism. Copyright (c) Blackwell Publishing Ltd 2008.
Do R&D spillovers have an impact on whether firms choose to go multinational or not? We present a three-stage Cournot duopoly model, which identifies under what conditions firms choose to service a foreign market through exports or localized production. The establishment of a foreign subsidiary improves the ability to learn from foreign R&D since spillovers are strongly moderated by geographical distance. We explicitly model the concept of absorptive capacity, where gains from spillovers are determined by own R&D investments. With exogenous R&D investments, the absorptive capacity effect contributes to increase the gains from going multinational when the firm is R&D-intensive. However, if R&D investments are endogenous, only medium-sized absorptive capacity effects will result in firms going multinational. Furthermore, higher spillover rates do not necessarily drive down R&D and profits for the multinational firm. This stands in contrast to models that ignore absorptive capacity effects. Copyright � 2006 The Authors; Journal compilation � 2006 Blackwell Publishing Ltd.
In small and open economies, absorption of foreign knowledge through international trade often plays a more important role for domestic innovation and growth than investment in domestic R&D. This suggests that trade policies can increase knowledge spillovers from abroad. Public support to R&D can be motivated both by positive internal knowledge externalities and by its ability to expand absorptive capacity. This dynamic, empirical, general equilibrium analysis models these interplays between R&D, trade and productivity. It compares public R&D support and export promotion of R&D based products with respect to long term growth and welfare impacts. We find that export promotion is inferior to R&D support in spurring R&D. However, it is not outperformed in terms of welfare generation. The reason is that existing and politically persistent policy interventions create inefficiencies that can be counteracted by R&D-based export promotion as a second-best policy.KEYWORDS: absorptive capacity, computable general equilibrium (CGE) model, endogenous growth, research and development, international spillovers * We acknowledge funding from the Norwegian Research Council programme RENERGI and would also like to thank two anonymous referees for helpful suggestions.
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