Showing papers by "David J. Teece published in 1990"

Innovation and Cooperation: Implications for Competition and Antitrust

Abstract: N k robel Laureate Robert Solow and his colleagues on MIT's Industrial Productivity Commission recently noted (Dertouzos, Lester, and Solow, 1989, p. 7): "Undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance" and later (p. 105) that "interfirm cooperation in the U.S. has often, though not always, been inhibited by government antitrust regulation." These striking conclusions warrant further exploration. Unfortunately, industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory. (On the other hand, vertical cooperation/contracting is viewed differently, and some textbooks provide treatments of supplier-buyer relationships in which cooperation is viewed as enhancing efficiency.) Both in the textbooks and in policy discussion among economists, cooperation among competitors is highly suspect, being perhaps the last bastion of what was once referred to as the "inhospitality tradition" in antitrust. As a result, very little literature addresses how cooperation among competitors can promote competition, notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today's increasingly global markets (Imai and Baba, 1989). Such cooperation is already important in Japan and in Europe. 1

Product Emulation Strategies in The Presence of Reputation Effects And Network Externalities: Some Evidence From The Minicomputer Industry

Abstract: A model of firm performance in the minicomputer industry is developed and estimated. We use an hedonic price formulation to analyze product design and pricing issues and a market share model to assess the demand effects of price-performance characteristics, installed base advantages and manufacturer reputation. The results, which are based on 1976–1983 data, demonstrate the importance of network externalities, price-performance competition and reputation. We utilize the estimated models to quantify the implications of several emulation strategies and several defensive strategies of incumbent manufacturers.

Innovation, Dynamic Competition, and Antitrust Policy

Abstract: The centennial of the Sherman Act affords us the opportunity to assess the relevance of antitrust law for the global economic environment of the future. Antitrust law has undergone significant changes since the passage of the Sherman Act in 1890, but the U.S. and world economies have undergone far greater changes. Although we do not advocate its abolition, we suggest that antitrust may be anachronistic in certain contexts, and, indeed, may inhibit effective competition. Specifically, we suggest that if society wishes to promote competition, the best way to do so is to promote innovation. That may require dismantling portions of our antitrust laws, which are largely based on neoclassical microeconomic analysis that aspires to a kind of competition-perfect competition-that may not really matter if enhancing long-run economic welfare is the goal of antitrust. Rather, it is dynamic competition that really counts. Dynamic competition is the competition that comes from the development of a new product or process. There are at least two types of innovative regimes that stimulate rivalry-incremental