October 26, 2020

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Ajay Bhaskarabhatla, Luis Cabral, Deepak Hegde, & Thomas Peeters' "Are Inventors or Firms the Engines of Innovation?" published in Management Science

In this study, we empirically assess the contributions of inventors and firms for innovation using a 37-year panel of U.S. patenting activity. We estimate that inventors’ human capital is 5–10 times more important than firm capabilities for explaining the variance in inventor output. We then examine matching between inventors and firms and find highly talented inventors are attracted to firms that (i) have weak firm-specific invention capabilities and (ii) employ other talented inventors...

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October 21, 2020

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Larry White's "Antitrust Economics and Consumer Protection Economics in Policy and Litigation: Why the Disparity?" published in the Economic Inquiry

The article argues that the disparity between the greater attention that economics has given to antitrust policy versus the lesser attention to consumer protection policy is due to 3 causes: a) the longer intellectual history and development of industrial organization; the history and culture of the Federal Trade Commission (where both policies are supposed to be pursued); and the splintering of consumer protection policy among a large number of federal and state agencies.

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September 28, 2020

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Thomas Cooley and Vincenzo Quadrini on The twenty-fifth anniversary of “Frontiers of Business Cycle Research"

Preface by Tom Cooley
It is very gratifying to have a conference celebrating the 25th Anniversary of the publication of Frontiers of Business Cycle Research (Cooley (1995)). I am deeply grateful to all who have contributed papers to the conference and to this special Volume of The Review of Economic Dynamics. It is especially significant to me since, in addition to putting together Frontiers, I was the founding editor of RED. It is clear from the diverse set of papers presented here that...

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September 24, 2020

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Richard Sylla on changes in the structure of US banking, forthcoming in the Financial History Review

A century ago the US commercial banking system was exceptional in two ways. It was by good measure the largest commercial banking system of any country. And it was different from the commercial banking systems of other leading countries in having tens of thousands of independent banks with very few branches rather than the more typical pattern of a far smaller number of banks with many branches. Today, a century later, the US system is more normal than exceptional, dominated by a small number...

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September 21, 2020

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Thomas Cooley, Ramon Marimon, and Vincenzo Quadrini's "Commitment in Organizations and the Competition for Talent," published in the Review of Economic Studies

We show that a change in organizational structure from partnerships to public companies—which weakens contractual commitment—can lead to higher investment in high return-and-risk activities, higher productivity (value added per employee) and greater income dispersion (inequality). These predictions are consistent with the observed evolution of the financial sector where the switch from partnerships to public companies has been especially important in the decades that preceded the 21st Century...

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September 10, 2020

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Nicholas Economides and Ioannis Lianos on Privacy and Antitrust, forthcoming in the Journal of Competition Law and Economics

We discuss how the acquisition of private information by default without compensation by digital platforms such as Google and Facebook results in a market failure and can be grounds for antitrust enforcement. To avoid the market failure, the default in the collection of personal information should be changed by law to “opt-out.” This would allow the creation of a vibrant market for the sale of users’ personal information to digital platforms. Assuming that all parties are perfectly informed...

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August 18, 2020

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Paul Scott, Myrto Kalouptsidi, and Eduardo Souza-Rodrigues' paper on dynamic discrete models, forthcoming in the Journal of Econometrics

Prevailing approaches to estimating dynamic discrete models have difficulty accommodating endogeneity problems and omitted variables. In the context of single agent models, we show that Euler Equations in Conditional Choice Probabilities (ECCP equations) allow researchers to address these challenges in much the same way they are dealt with in the context of static econometric models: using linear regressions and instrumental variables.

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August 6, 2020

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Petra Moser and Michela Giorcelli's paper on the effects of copyrights on creativity, forthcoming in the Journal of Political Economy

Copyrights establish intellectual property rights in creative goods ranging from literature and science to images, music, and film. Although their primary purpose is to encourage creativity, the causal effects of copyrights on creativity have proven difficult to establish. This is due primarily to a lack of experimental variation today, when copyrights are modified in response to lobbying by the owners of particularly valuable creative goods. To address this issue, this paper exploits...

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july 17, 2020

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Petra Moser and Barbara Biasi's paper on the effects of copyrights on science, forthcoming in the American Economic Journal: Microeconomics

Copyrights, which establish intellectual property in music, science, and other creative goods, are intended to encourage creativity. Yet, copyrights also raise the cost of accessing existing work— potentially discouraging future innovation. This paper uses an exogenous shift towards weak copyrights (and low access costs) during WWII to examine the potentially adverse effects of copyrights on science. Using two alternative identification strategies, we show that weaker copyrights encouraged...

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July 17, 2020

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Walker Hanlon and Taylor Jaworski's new NBER working paper on IP Protection

Intellectual property (IP) protection, achieved through mechanisms such as patents and copyrights, is a central feature of modern innovation systems. Yet there are important aspects of IP protection that remain poorly understood. One of these is the impact of offering protection to producers of one type of good on innovation rates in other complementary goods. In "Spillover Effects of Intellectual Property Protection in the Interwar Aircraft Industry", joint with Taylor Jaworski...

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July 14, 2020

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Michael Dickstein and David Chan's paper on Medicare forthcoming in the Quarterly Journal of Economics

The American Medical Association’s Relative Value Scale Update Committee (RUC) has been called “the most important health-care group you’ve never heard of.” When Medicare needs to set a price for a new or existing procedure, it turns to the physician committee for advice on the relative value of the procedure. RUC recommendations influence the annual $70 billion in Medicare spending and half a trillion dollars in other public and private spending for physician services that generally follow...

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