Joshua S. Gans

• PhD (Stanford)
• Professor of Strategic Management at University of Toronto

How should Theory-based entrepreneurs search for strategies to implement their ideas? The theory-based view of strategy posits that decision makers hold key conjectures about their path to success and use theory to understand and test beliefs underlying those conjectures. This causal framework also has implications for entrepreneurial search: the p...

AI may provide a path to decrease inequality.

Analyses of artificial intelligence (AI) adoption focus on its adoption at the individual task level. What has received significantly less attention is how AI adoption is shaped by the fact that organizations are composed of many interacting tasks. AI adoption may, therefore, require system‐wide change, which is both a constraint and an opportunity...

Entrepreneurs must choose between alternative strategies for bringing their idea to market. They face uncertainty regarding both the quality of their idea as well as the efficacy of each strategy. Although entrepreneurs can reduce this uncertainty by conducting tests, any single test conflates the signal of the efficacy of the particular strategy a...

A central premise of research in the strategic management of innovation is that start-ups are able to leverage emerging technological trajectories as a source of competitive advantage. But, if the potential for a technology is given by the fundamental character of a given technological trajectory, then why does entrepreneurial strategy matter? Or,...

Research Summary This paper develops an integrated framework linking the nature of the entrepreneurial choice process to the foundations of entrepreneurial strategy. Because entrepreneurs face many alternatives that cannot be pursued at once, entrepreneurs must adopt (implicitly or explicitly) a process for choosing among entrepreneurial strategies...

We provide a new model wherein firms of different productivities survive in an industry despite the threat of entry by high productivity firms. We demonstrate that an efficient incumbent has a unilateral incentive to establish a relational contract, softening price competition to strengthen its inefficient rival in a war of attrition that emerges p...

Independent and chain coffee shops offer similar products, but differ in their organisational form and branding. We examine the entry and exit patterns of 4,768 coffee retailers in Melbourne between 1991 and 2010. Panel logit regressions indicate that chain stores have no discernible effect on the exit or entry decisions of independent stores. Howe...

The relationship between management and digital technology: experts present a new agenda for the practice of management. Digital technology has profoundly affected the ways that businesses design and produce goods, manage internal communication, and connect with customers. But the next phase of the digital revolution raises a new set of questions a...

Innovation’s private value is typically less than its social value, so to encourage innova- tion, researchers in economics and strategy have focused on how innovators can appropri- ate value across different economic, institu- tional, and strategic environments ( Teece 1986; Gans and Stern 2003 ) . For sta rt-ups without pre-existing assets such as...

Most approaches to entrepreneurship assume that entrepreneurial control over their inventions is critical for success and, in turn, for incentives. Such control is usually supported by regulations that protect intellectual property including patents, copyrights, and trade secrets. Each give the entrepreneurs control over who can appropriate value f...

This paper provides a theoretical investigation of the tension over knowledge disclosure between firms and their scientific employees. While empirical research suggests that scientists exhibit a “taste for science,” such open disclosures can limit a firm's competitive advantage or ability to profitably commercialize their innovations. To explore ho...

We develop a model of advertising markets in an environment where consumers may switch (or “multi-home”) across publishers. Consumer switching generates inefficiency in the process of matching advertisers to consumers, because advertisers may not reach some consumers and may impress others too many times. We find that when advertisers are heterogen...

This paper reviews some recent developments in digital currency, focusing on platform-sponsored currencies such as Facebook Credits. We develop a model of platform management in which platform currency offers “enhancements” to users who spend time on the platform. Users allocate time between earning money outside of the platform and using the platf...

This paper provides the first review of developments in the application of cooperative game theory to issues of interest to strategic management; what we term “value capture theory.” Value capture theory provides a broad approach to formal strategy theory aimed at under- standing persistent heterogeneity in firm performance, nesting competitive mar...

This paper provides a framework to classify and evaluate the impact of net neutrality regulations on the allocation of consumer attention and the distribution of surplus between consumers, ISPs and content providers. While the model provided largely nests other contributions in the literature, here the focus is on including direct payments from con...

Formal attribution provides a means of recognizing scientific contributions as well as allocating scientific credit. This paper examines the processes by which attribution arises and its interaction with market assessments of the relative contributions of members of scientific teams and communities – a topic of interest organizational economics of...

When start-up innovation involves a potentially disruptive technology—initially lagging in the predominant performance metric, but with a potentially favorable trajectory of improvement—incumbents may be wary of engaging in cooperative commercialization with the start-up. While the prevailing theory of disruptive innovation suggests that this will...

We augment the multi-market collusion model of Bernheim and Whinston (1990) by allowing for firm entry into, and exit from, individual markets. We show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement: Collusion at the extensive margin whereby firms collude by avoiding entry into each other's markets or te...

This paper is the first to examine collusion at the extensive margin (whereby firms collude by avoiding entry into each other's markets or territories). We demonstrate that such collusion oers distinct predictions for the role of multiple markets in sustaining collusion such as the use of proportionate response enforcement mechanisms, the possibili...

This paper is the first to provide a general context whereby potential entry can lead incumbent firms to permanently reduce the intensity of competition in a market. All previous results found that potential entry would lead to lower prices and greater competition. Examining markets where entry occurs by the acquisition of access rights from an exi...

There is a puzzle arising from empirical analyses of the impact of music piracy that this has caused declines in music revenue without a consequential decline, and perhaps even an increase, in the entry of artists and the supply of high quality music. There have been numerous explanations posited and this paper adds a novel one: that artists are ti...

This paper examines an environment where original content can be remixed by follow-on creators. The modelling innovation is to assume that original content creators and remixers can negotiate over the ‘amount’ of original content that is used by the follow-on creator in the shadow of various rights regimes. The following results are demonstrated. F...

We provide a new model that generates persistent performance differences amongst seemingly similar enterprises. Our model provides a mechanism whereby efficient incumbent rivals can give permission for an inefficient firm to exist in the presence of efficient entrants. We demonstrate that, in a repeated game, an efficient incumbent has a unilateral...

In 2007, Congress created a fast-track review voucher at the US Food and Drug Administration (FDA) as a reward for approval of a drug for a neglected disease. The developer of a neglected-disease drug receives a transferable voucher for faster review of any other drug. Similar fast-track vouchers are being offered by other agencies including the US...

In this paper, we explore the hypothesis that an important force behind the collapse in advertising revenue experienced by newspapers over the past decade is the greater consumer switching facilitated by online consumption of news. We introduce a model of the market for advertising on news media outlets whereby news outlets are modeled as competing...

When do scientists and other innovators organize into collaborative teams, and why do they do so for some projects and not others? At the core of this important organizational choice is, we argue, a trade-off scientists make between the productive efficiency of collaboration and the credit allocation that arises after the completion of collaborativ...

This paper provides an analysis of a non-cooperative pairwise bargaining game between agents in a network. We establish that there exists an equilibrium that generates a coalitional bargaining division of the reduced surplus that arises as a result of externalities between agents. That is, we provide a non-cooperative justification for a cooperativ...

This paper reviews some recent developments in digital currency focussing on platform-sponsored currencies such as Facebook Credits. In a model of platform management, we find that it will not likely be profitable for such currencies to expand to become fully convertible competitors to state-sponsored currencies.

This paper considers the role of the allocation of scientific credit in determining the organization of science. We examine changes in that organization and the nature of credit allocation in the past half century. Our contribution is a formal model of that organizational choice that considers scientist decisions to integrate, collaborate or publis...

When start-up innovation involves a potentially disruptive technology—initially lagging in the predominant performance metric, but with a potentially favorable trajectory of improvement—incumbents may be wary of engaging in cooperative commercialization with the start-up. While the prevailing theory of disruptive innovation suggests that this will...

We provide a new method of identifying the level of relative bargaining power in bilateral negotiations using exogenous variation in the degree of conflict between parties. Using daily births data, we study negotiations over birth timing. In doing so, we exploit the fact that fewer children are born on the ‘inauspicious’ dates of February 29 and Ap...

This chapter takes a conceptual look at the issues associated with funding academic research. It begins with a paradox: when agencies funding scientific research emphasize basic research over translational projects, they are criticized for their impracticality, but when they emphasize near-term mission-oriented R&D projects, they are criticized for...

This paper provides a prospective and retrospective quantitative assessment of the impact of a passive vertical integration between a large electricity retailer and a large electricity generator in the Australian National Electricity Market (NEM). We adapt a standard model of fixed-price forward contracting behavior by an electricity retailer befor...

This paper examines the interaction between intellectual property protection and competition policy on the choice of entrepreneurs with respect to commercialization as well as the rate of innovation. We find that stronger intellectual property protection makes it more likely that entrepreneurs will commercialize by cooperating with incumbents rathe...

In a dynamic environment where underlying competition is 'for the market,' this paper examines what happens when entrants and incumbents can negotiate for the market. For instance, this might arise when an entrant innovator can choose to license to or be acquired by an incumbent firm; i.e., engage in cooperative commercialization. It is demonstrate...

This paper examines then notion that more stringent climate change policy will induce innovation in environmentally friendly technologies. While past work has been concerned that such policies may stimulate such innovation at the expense of innovation elsewhere in the economy, the model presented here challenges the presumption that environmentally...

At a time when ever-rising smartphone sales are driven as much by demand for devices that run must-have third-party apps as by the quality of traditional voice and data services, there is a myriad of challenges facing the software developer who is looking to choose which mobile development software platform to invest in. Written from the perspectiv...

Knowledge disclosure plays a central role in models of economic growth. Few studies, however, have established the conditions that support or inhibit such disclosures. In this paper, we provide a theoretical model that evaluates the conditions supporting the disclosure of privately funded knowledge through scientific publication, patenting, or both...

This report looks at some of the methodological considerations in valuing the benefits of broadband. It has a particular focus on these considerations in the context of the planned National Broadband Network (NBN) project in Australia and in the context of any social cost benefit analysis of the NBN or other broadband project. While the underlying...

This paper examines the pricing of mobile applications when application providers can either supply consumers directly or through a mobile platform (such as a smart phone or tablet). It is demonstrated that when platform access (i.e., purchasing a device) takes place in advance of application pricing, a non-trivial unravelling problem exists that r...

This paper examines the interactions between the Republic of Science and the Patent System that shape the incentives for innovators and the disclosure of innovations across technical fields. It therefore places our understanding of the patent system and decisions around knowledge disclosure in patents into a broader context, illustrating how policy...

This paper examines argues that while two distinct perspectives characterize the foundations of the public funding of research – filling a selection gap and solving a disclosure problem – in fact both the selection choices of public funders and their criteria for disclosure and commercialization shape the level and type of funding for research and...

Knowledge disclosure plays a central role in models of economic growth. In this paper, we provide a theoretical model that evaluates the conditions supporting disclosures of privately funded knowledge through scientific publication, patenting, or both. Our analysis is grounded in the conflicting incentives facing researchers and their funders: scie...

This paper examines the claim that dynamic considerations play a particularly important role in certain industries (in particular, those characterized by high rates of product innovation) and, consequently, render antitrust analysis based on static concepts inappropriate or misleading. By expositing and applying the fully dynamic model of Segal and...

Recent anti-trust decisions have proposed remedies for tying of different computer software and applications. The remedies have drawn criticism for being ineffectual. This paper develops a model tailored to deal with the specific issue of tying in computer applications. It provides a rationale for such tying and also any associated harm to social w...

Carbon offsets can be purchased by consumers who wish to mitigate their emissions. In a model where the demand for such offsets is driven by consumers who feel guilt about their emissions, it is show that the introduction of offsets are complements to existing dirty‟ consumption and can cause such consumption to increase. Net emissions are shown to...

This paper considers the effect of exclusive contracts on investment decisions in a market with two upstream and two downstream firms. Segal and Whinston's (2000) irrelevance result is generalised and it is shown that exclusive contracts have no effect on the equilibrium level of internal investment for the contracted parties when competition exist...

This article draws on recent work in market design to evaluate the conditions under which a market for ideas or technology (MfTs) will emerge and operate efficiently. As highlighted by Roth (2007), effective market design must ensure three basic principles: market thickness, lack of congestion, and market safety. Roth also highlights the importance...

This paper examines the claim that dynamic considerations play a particularly important role in certain industries (in particular, those characterized by high rates of product innovation) and, consequently, render antitrust analysis based on static concepts inappropriate or misleading. By expositing and applying the fully dynamic model of Segal and...

This paper examines the impact of geographic targeting technology on local advertising markets when local and general media outlets compete for readers. In a base case, it is demonstrated that when the general outlet adopts such technologies, this does not impact on advertising prices or profits as that outlet expands ad space to meet demand. When...

Content providers rely on advertisers to pay for content. TiVo, remote controls, and pop-up ad blockers are examples of ad-avoidance technologies that allow consumers to view content without ads, and thereby siphon off the content without paying the ‘price.’ We examine the content provider’s reaction to such technologies, demonstrating that their a...

We employ several different approaches to estimate the political position of Australian media outlets, relative to federal parliamentarians. First, we use parliamentary mentions to code over 100 public intellectuals on a left-right scale. We then estimate slant by using the number of mentions that each public intellectual receives in each media out...

This article draws on recent work in market design to evaluate the conditions under which a market for ideas or technology (MfTs) will emerge and operate efficiently. As highlighted by Roth ( 2007 ), effective market design must ensure three basic principles: market thickness, lack of congestion, and market safety. Roth also highlights the importan...

How much do nonmedical factors affect the timing of conceptions, births and deaths? To test this, we estimate the effect of the millennium on conceptions, births and deaths. With a highly flexible empirical specification, we find large and significant increases in conceptions and births, and suggestive evidence of an effect on deaths.

Like any new parent, Joshua Gans felt joy mixed with anxiety upon the birth of his first child. Who was this blanket-swaddled small person and what did she want? Unlike most parents, however, Gans is an economist, and he began to apply the tools of his trade to raising his children. He saw his new life as one big economic management problem—and if...

The business model of commercial (free-to-air) television relies on advertisers to pay for programming. Viewers 'inadvertently' watch advertisements that are bundled with programming. Advertisers have no reason to pay to have their ads embedded if the viewers succeed in unbundling the advertisements from the entertainment content (advertising bypas...

This paper considers the outsourcing choice of a downstream firm with its own upstream production assets. Using both a standard linear pricing model and a bilateral bargaining approach, we examine the equilibrium pricing outcomes that emerge if there are two downstream and two upstream assets. We then characterize the downstream firm's decision as...

This paper provides an economic analysis of the competition issues arising from access to the electronic payments system. Such concerns were raised in the Wallis Report and in particular in an ACCC Draft Determination on the Australian Payments Clearing Association (1997). We draw on existing US economic literature to explain the theory of network...

If births are unaffected by medical technology, then they should be uniformly distributed over the week. We document that nearly one-third of births that would have occurred on a weekend are 'moved' to a weekday. This proportion has grown significantly since 1960. Splicing together data from several sources, we construct long-run series of cesarean...

We analyze value appropriation under competition using cooperative game theory and demonstrate that competition embodies two competing rivalries: to appropriate value on the one hand and to create it on the other. The management of this tension is central to strategy. We present a new notion of competitive intensity, show where the traditional view...

We estimate the impact of annual obstetricians and gynecologists' conferences on births in Australia and the United States. In both countries, the number of births drops by 2-4 percent during the days on which these conferences are held. Since it is unlikely that parents take these conferences into account when conceiving their child, this suggests...

This paper provides a new explanation for tying that is not based on any of the standard explanations -- efficiency, price discrimination, and exclusion. Our analysis shows how a monopolist sometimes has an incentive to tie a complementary good to its monopolized good in order to transfer profits from a rival producer of the complementary product t...

This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of whether IP has already been granted. In contrast, the need to disclosure complementary (yet unprotected) k...

This paper reverses the standard order between input supply negotiations and downstream competition and assumes that competition for orders takes place prior to procurement of inputs in a vertical chain. It is found that oligopolistically competitive outcomes will result despite the presence of an upstream monopolist. Here, vertical integration is...

In this article I derive a concentration measure for markets with multiple vertical segments. I derive the measure using a model of vertical contracting in which upstream and downstream firms bargain bilaterally and may be integrated. The resulting vertical Hirschman-Herfindahl index provides a measure of the degree of distortion in the vertical ch...

Economists think many (most?) things are subject to incentives. The evidence from ''Down Under'' suggests that even the timing of death could vary with a repeal of estate taxes.

Voluntary purchases of offsets for carbon emissions have been criticized as potentially increasing emissions. However, Joshua S. Gans argues that even if offsets do increase the consumption of carbon intensive goods, net emissions will always fall because these goods will become less carbon intensive.

The ability of a monopoly seller to prevent resale is often presented as a necessary condition for first degree and third degree price discrimination. In this paper, we explore this claim and show that, even with costless arbitrage markets, price discrimination may continue to be both feasible and profit maximising despite potential resale. With fi...

In the third century AD, Roman Emperor Marcus Aurelius told his readers that 'Death, like birth, is a secret of nature'. 1 Yet in the ensuing centuries, medicine has done much to learn the secrets of birth and death. Today, technological insights make it possible for doctors – and parents – to have an influence over when babies are born. More surpr...

First Draft: 24 th August, 2004 This Version: 25 th October, 2004 This paper reviews and synthesises the recent literature on the impact of access price regulation on investment incentives. In so doing, it emphasises key themes that such regulation can improve investment outcomes, it can do so while encouraging competition and that pricing outcomes...

This paper argues that broadband needs many local solutions, not a single national solution. It documents how the technologies, the user requirements and the broad investment costs of providing broadband vary considerably across localities. In contrast, current proposed solutions call for national strategies far removed from local circumstance. Sev...