[Show abstract][Hide abstract] ABSTRACT: Intellectual property accounts for a growing share of firms’ assets. It is more mobile than other forms of capital, and could be used by firms to shift income offshore and to reduce their corporate income tax liability. We consider how influential corporate income taxes are in determining where firms choose to legally own intellectual property. We estimate a mixed (or random coefficients) logit model that incorporates important observed and unobserved heterogeneity in firms’ location choices. We obtain estimates of the full set of location specific tax elasticities and conduct ex ante analysis of how the location of ownership of intellectual property will respond to changes in tax policy. We find that recent reforms that give preferential tax treatment to income arising from patents are likely to have significant effects on the location of ownership of new intellectual property, and could lead to substantial reductions in tax revenue.
Journal of Public Economics 04/2014; · 1.46 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: Existing hedonic methods cannot be easily adapted to estimate willingness to pay for product characteristics when willingness to pay depends on a very large basket of goods. We show how to marry these methods with revealed preference arguments to estimate bounds on willingness to pay using data on purchases of seemingly impossibly high dimensional baskets of goods. This allows us to use observed purchase prices and quantities on a large basket of products to learn about individual household’s willingness to pay for characteristics, while maintaining a high degree of flexibility and also avoiding the biases that arise from inappropriate aggregation.We illustrate the approach using scanner data on food purchases to estimate bounds on willingness to pay for the organic characteristic.
[Show abstract][Hide abstract] ABSTRACT: Food purchases differ substantially across countries. We use detailed household level data from the US, France and the UK to (i) document these differences; (ii) estimate a demand system for food and nutrients, and (iii) simulate counterfactual choices if households faced prices and nutritional characteristics from other countries. We find that differences in prices and characteristics are important and can explain some difference (e.g., US-France difference in caloric intake), but generally cannot explain many of the compositional patterns by themselves. Instead, it seems an interaction between the economic environment and differences in preferences is needed to explain cross country differences.
American Economic Review 02/2013; · 2.69 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: We adapt the Bresnahan and Reiss (1991. Entry and competition in concentrated markets. The Journal of Political Economy 99, no. 5: 977–10095.
Bresnahan , T. and Reiss , P. 1991 . Entry and competition in concentrated markets . The Journal of Political Economy , 99 ( 5 ) : 977 – 1009 . [CrossRef], [Web of Science ®]View all references) model to allow for multiple store formats. We estimate the model using data for English supermarkets, and evaluate the impact of restrictive planning regulation on entry into the English grocery retail industry. We find that more restrictive planning regulation reduces the number of large format supermarkets in equilibrium. However, the impact is overstated if variation in demographic characteristics across markets is not also controlled for. Our estimates suggest that restrictive planning regulation leads to a loss to consumers of up to £10 m per annum. This cost must be offset against any benefits that arise, e.g. due to reduced congestion.
The International Review of Retail Distribution and Consumer Research 02/2012; Distribution and Consumer Research(Vol. 22):1-25.
[Show abstract][Hide abstract] ABSTRACT: The research activities of multinational firms is increasingly mobile raising concerns about displacement of high-skilled employment in headquarter countries. We estimate of the impact offshoring inventors has on firms' use of inventors at home using within firm variation across industries. We use a instrumental variables to tackle possible endogeneity and identify robust bounds on the estimate. We cannot rule out the possibility that foreign inventors displace home inventors, but our main result suggests that a 10% increase in the number of inventors abroad results in a 1.9% increase in the number of inventors at home.
[Show abstract][Hide abstract] ABSTRACT: There is policy interest in using tax to change food purchasing behaviour. The literature has not accounted for the oligopolistic structure of the industry. In oligopoly the impact of taxes depend on preferences, and how firms pass tax onto prices. We consider a tax on saturated fat. Using transaction level data we find that the form of tax and firms' strategic behaviour are important determinants of the impact. Our results suggest that an excise tax is more efficient than an ad valorem tax at reducing saturated fat purchases and an ad valorem tax is more efficient at raising revenue.
[Show abstract][Hide abstract] ABSTRACT: We examine the “home bias” of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models, and we apply it to data on over two million patent citations between 1975 and 1999. Home bias is exaggerated in models that do not control for fixed effects. The fall in home bias over time is weaker for the pharmaceuticals and information/communication technology sectors where agglomeration externalities may remain strong.
[Show abstract][Hide abstract] ABSTRACT: The literature suggests that tax rates on mobile activities should fall to zero. Intellectual property is very mobile and has grown in importance. Firms can use intellectual property to shift income offshore and reduce their corporate income tax liability. Yet most intellectual property is held in relatively high tax countries. We estimate the impact of corporate taxes on where firms hold patents. We consider domestic and international taxes, and control for the potential non-tax costs and benefits associated with different locations. We allow heterogeneity across industries, firm size and, most importantly, unobservable patent specific heterogeneity in the responsiveness of patent location to tax. Our results suggest that, on average, corporate tax rates have a negative impact on the likelihood of a firm choosing a location, and that there is substantial heterogeneity in responses. We simulate the impact of recent reforms that apply a lower tax rate to patent income, finding that they attract patent income but result in losses in government revenues.
[Show abstract][Hide abstract] ABSTRACT: In 2010 China was the world's fourth largest filer of patent applications. This followed a decade of unprecedented increases in investment in skills and Research and Development. If current trends continue China could rank first in the very near future. We provide evidence that the growth in Chinese patenting activity has been accompanied by a growth in Chinese inventors creating technologies that are near to the science base. Part of the success of China has been to attract the investment of foreign multinationals. This is also true for a number of other Emerging Economies. Europe's largest multinational firms increasingly file patent applications that are based on inventor activities located in emerging economies, often working alongside inventors from the firm's home country.
[Show abstract][Hide abstract] ABSTRACT: Governments around the world are increasingly concerned about the rise in diet-related chronic disease and there has been increased interest in policy interventions targeted at changing eating habits. In this paper, we discuss the ways in which food markets might fail to deliver the optimal outcome and how this may justify government intervention. We consider how well different types of policies – information campaigns, taxes and regulations – are able to counteract these market failures and we consider some of the implementation issues associated with targeting different consumers and anticipating firms' strategic responses.
[Show abstract][Hide abstract] ABSTRACT: European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.
Griffith, R. and Harrison, R. and Simpson, H. (2006) Product market reform and innovation in the EU. Working paper. IFS Working Papers (W06/17). Institute for Fiscal Studies, London, UK. 01/2010;
[Show abstract][Hide abstract] ABSTRACT: The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work - multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL.
Review of Economics and Statistics 01/2010; · 2.66 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: The recent literature has brought together the characteristics model of utility and classic revealed preference arguments to learn about consumers' willingness to pay. We incorporate market pricing equilibrium conditions into this setting. This allows us to use observed purchase prices and quantities on a large basket of products to learn about individual household's willingness to pay for characteristics, while maintaining a high degree of flexibility and also avoiding the biases that arise from inappropriate aggregation. We illustrate the approach using scanner data on food purchases to estimate bounds on willingness to pay for the organic characteristic. We combine these estimates with information on households' stated preferences and beliefs to show that on average quality is the most important factor affecting bounds on household willingness to pay for organic, with health concerns coming second, and environmental concerns lagging far behind.
Centre for Microdata Methods and Practice, Institute for Fiscal Studies, CeMMAP working papers. 01/2010;
[Show abstract][Hide abstract] ABSTRACT: How does firm entry affect innovation incentives in incumbent firms? Microdata suggest that there is heterogeneity across industries. Specifically, incumbent productivity growth and patenting is positively correlated with lagged greenfield foreign firm entry in technologically advanced industries, but not in laggard industries. In this paper we provide evidence that these correlations arise from a causal effect predicted by Schumpeterian growth theory-the threat of technologically advanced entry spurs innovation incentives in sectors close to the technology frontier, where successful innovation allows incumbents to survive the threat, but discourages innovation in laggard sectors, where the threat reduces incumbents' expected rents from innovating. We find that the empirical patterns hold using rich micro panel data for the United Kingdom. We control for the endogeneity of entry by exploiting major European and U.K. policy reforms, and allow for endogeneity of additional factors. We complement the analysis for foreign entry with evidence for domestic entry and entry through imports. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Review of Economics and Statistics 02/2009; 91(1):20-32. · 2.66 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: This paper documents the potential and actual savings that consumers realize from four particular types of purchasing behavior: purchasing on sale; buying in bulk (at a lower per unit price); buying generic brands; and choosing outlets. How much can and do households save through each of these behaviors? How do these patterns vary with consumer demographics? We use data collected by a marketing firm on all food purchases brought into the home for a large, nationally representative sample of U.K. households in 2006. We are interested in how consumer choice affects the measurement of price changes. In particular, a standard price index based on a fixed basket of goods will overstate the rise in the true cost of living because it does not properly consider sales and bulk purchasing. According to our measures, the extent of this bias might be of the same or even greater magnitude than the better-known substitution and outlet biases.
Journal of Economic Perspectives 01/2009; 23(2):99-120. · 4.21 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: This article exploits a quasi-experimental setting to estimate the impact that a commonly used performance-related pay scheme had on branch performance in a large distribution firm. The scheme, which is based on the Balanced Scorecard, was implemented in all branches in one division but not in another. Branches from the second division are used as a control group. Our results suggest that the Balanced Scorecard had some impact but that it varied with branch characteristics, and, in particular, branches with more experienced managers were better able to respond to the new incentives. (c) 2009 by The University of Chicago. All rights reserved..
Journal of Labor Economics 01/2009; 27(1):49-82. · 1.64 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: This paper examines productivity catch-up as a source of establishment productivity growth. We present evidence that, other things equal, establishments further behind the industry frontier experience faster rates of productivity growth. Geographic proximity to frontier firms makes catch-up faster. Our econometric specification implies a long-run relationship between productivity levels, where nonfrontier establishments lie a steady-state distance behind the frontier such that their rate of productivity growth including catch-up equals productivity growth at the frontier. We use our econometric estimates to quantify the implied contribution to productivity growth of catch-up to both the national and regional productivity frontiers. Copyright (c) 2009, Wiley Periodicals, Inc.
Journal of Regional Science 01/2009; 49(4):689-720. · 2.00 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: Hedonic methods are currently considered state-of-the-art for handling quality changes when compiling consumer price indices. The present article proposes first a mathematical description of characteristics and of elementary aggregates. In a following step, a hedonic econometric model is formulated and hedonic elementary population indices are defined. These indices extend from simple indices based on some average quality to universal formulae that incorporate the full quality spectrum of the respective elementary aggregate. We emphasise that population indices are unobservable economic parameters that need to be estimated by suitable sample indices. It is shown that most of the hedonic elementary index formulae used in practice are sample versions of particular hedonic elementary population indices.
University College London, Open Access publications from University College London. 01/2009;