Strategic location choice under dynamic oligopolistic competition and spillovers

Abstract

This paper investigates firms' optimal location choices explicitly accounting for the role of inwards and outwards knowledge spillovers in a dynamic Cournot oligopoly with firms that are heterogeneous in their ability to carry out cost-reducing R&D. Firms can either locate in an industrial cluster or in isolation. Technological spillovers are exchanged between the firms in the cluster. It is shown that a technological leader has an incentive to locate in isolation only if her advantage exceeds a certain threshold, which is increasing in firms' discount rate, in industry dispersion, and in the intensity of knowledge spillovers. Scenarios are identified where although it is optimal for the technological leader to locate in isolation, from a welfare perspective it would be desirable that she locates in the cluster.

Debt Restructuring with Multiple Bank Relationships

“…We now correlate more precisely our estimates to the theoretical model put forward in the previous Section by considering different sub-samples of firms (Table 7). First, we select only those firms that are reported as doubtful by at least one-third of the lending banks, thereby restricting our analysis to those cases where there is consensus on the difficulties of the firm (column [1]). Then, we drop from this sample all the firms that have just one lending relationship, as our main goal is to investigate the impact of the interactions among different banks (columns [2], [3] and [4]).…”

“…The estimates are fairly stable across the different specifications, in spite of the fact that the number of observations varies significantly across the different sub-samples. Table 11 reports our results for the linear probability model (considering the same sub-samples as in Table 10), with firm fixed effects (columns [1]- [3]) or both firm-and bank-fixed effects (columns [4]- [6]). Our main results are confirmed, although the probability to meet in the future banks belonging to the same pool of lenders has now a much larger impact on the probability to restructure outstanding debt.…”

“…The final year we consider is 2010. Around 54 percent of the firms in the sample survives (1,345 firms), while 46 percent either goes bankrupt or it is liquidated. The share of successful firms rises to 85 percent among those who have restructured, while it is 42 percent for the others.…”

“…In Italy, the average number of banks for non-financial firms is 3 when bank lending is between 500 thousands and 2.5 million euro, and 4 for loans up to 5 million euro; considering higher values of total loans, the number of banks becomes very large (up to 8 banks, see Figure 1) and the first lender covers less than 40 per cent of the total bank debt. 1 The theoretical literature explains this behavior as aimed at reducing the information monopoly held by the main bank, which may translate into some form of rent extraction (Sharpe, 1990; Rajan, 1992) and induce misbehavior phenomena during the restructuring phase (Guiso and Minetti, 2010).…”

Strategic Product Design Under Duopoly

“…De Palma, Ginsburgh, Papageorgiou, and Thisse (1985) consider that consumers at each point of the Hotelling line have heterogenous unobservable preferences, an assumption which leads to a minimum differentiation result but is meaningless outside a spatial framework.. This spatial feature is all the more present in the several recent papers (Alcacer and Chung (2007), Colombo and Dawid (2014) among others) which have investigated the role of knowledge spillovers in the decision of firms to locate in isolation or in a cluster.…”