Events

Intellectual Property as Loan Collateral

Presenter: David Heller (Max Planck Institute for Innovation and Competition)

Discussant: Annabelle Haché Harter (TUM)

Technology Governance as Selection Criterion: The Case of Smart Cities

Presenter: Lucia Baur (TUM)

Discussant: Safia Bouacha (ISTO)

Using novel and large-scale data, we reassess two claims on the effect of a connection to the editorial board of an economics journal and propose a new mechanism. Rather than editors helping departmental colleagues, the connection is particularly beneficial for the joining board members themselves; the impact on departmental colleagues who are not coauthors of the editor is comparatively small. Rather than a marked increase in quality thanks to connections, we find no such increase, if any, there is evidence of favouritism among journals with little editorial board rotation.

Contact: Michael E. Rose

Recent research and popular debate suggest that there can be a positive relationship between diversity, or differences in team member characteristics, and performance in novel problem-solving. In this study, we take steps to disambiguate the causal effects of knowledge diversity versus demographic diversity (gender, race, age) on innovation performance. We report on a field experiment in which 834 adults engaged in an inherently multi-disciplinary product development problem. Team composition was randomly assigned, as was the degree to which teams were primed to engage in a collaborative orientation and work style. We find that performance effects of knowledge and demographic diversity are—to a striking degree—statistically separate, independent, and qualitatively distinct. Consistent with prior literature, the results indicate largely distinct implications of diversity on knowledge integration versus group problem-solving processes. Apart from this main goal of disambiguating diversity effects most broadly, the study contributes a series of results on causal effects of knowledge, gender, race, and age diversity in a field experimental context.

Contact: Svenja Friess

The Digital Services Act (DSA) sets out numerous “due diligence” obligations for intermediaries concerning any type of illegal information. Copyright infringing content arguably is illegal content under the DSA, and accounts empirically for most take-down decisions by intermediaries. New rules on notice-and-action (Art. 14), statement of reasons (Art. 15), trusted flaggers (Art. 19), and measures and protection against misuse (Art. 20) add a level of specificity not found in the e-Commerce Directive (ECD), nor in the lex specialis of the Copyright in the Digital Single Market Directive (Art. 17, CDSM). The UK chose not to implement the CDSM Directive, nor is the infringement of intellectual property rights a relevant offence that triggers new “duty of care” obligations under the Online Safety Bill published on 17 March 2022 (section 52(8)). However, the Bill also abandons the (Art. 15, ECD) prohibition of “general monitoring”, endorsing “proactive technology” and instituting a new regulatory system based on “codes of practice”. Codes of practice are essentially terms of service negotiated between “high-risk, high-reach” platforms and the regulator Ofcom, with significant executive powers for the Secretary of State. In contrast the proposed EU Digital Services Act only includes vague references to such self- and co-regulatory agreements under Art. 35 (“The Commission and the Board shall encourage and facilitate the drawing up of codes of conduct at Union level to contribute to the proper application of this Regulation”, with a focus on tackling “different types of illegal content and systemic risks”) and under Art. 36 (relating to online advertising). This talk will discuss opportunities and potential pitfalls for Copyright policy from these emerging Codes. Codes of practice and Codes of conduct imply ongoing revision and flexibility, which makes them a potentially attractive regulatory tool for fast developing industries and markets. Unlike statutes, Codes do not involve a complex legislative procedure. They can be more responsive to changing circumstances. On the other hand, a Code’s legal standing and enforcement conditions are often uncertain. State functions may be delegated to private firms without democratic scrutiny and appropriate procedural safeguards.

Contact: Marina Chugunova

Prior research, primarily based on lab experiments, suggests that females might be more averse to competition than males and could be more inclined towards collaboration, instead. Were these findings to generalize to adults across the workforce, there could be profound implications for organizational theory and practice. This paper reports on a field experiment in which adults from a wide range of fields and ages were invited to join a product development opportunity. Individuals were randomly assigned to treatments framing the opportunity as either involving competitive or collaborative interactions with other participants. Among those outside of science, technology, engineering, and math fields (STEM), we find significant gender differences in willingness to participate under competition. Among those in STEM fields, we detect no statistical gender differences. These results and broader patterns documented in the study are consistent with significant heterogeneity in competitiveness across both men and women, with field and career sorting resulting in differences (in gender differences) across fields.

Contact: Rainer Widmann

Innovation for social progress (ISP) – innovation that addresses society’s greatest challenges, like climate change, education, and healthcare – is characterized by a unique double-externality challenge. Imperfect appropriability, which generates knowledge spillovers and applies to innovation of all types, but also production and consumption externalities, which lead to prices not fully reflecting the costs and benefits to society. In this paper, we posit that these two market failures are interdependent and show how this changes the expected effects of each on ISP relative to when they are considered in silos. We then test the theoretical predictions by estimating the effects of knowledge spillovers and carbon pricing – capturing the two market failures and their interactions – on green and dirty innovation in the United Kingdom’s energy, transportation, and manufacturing sectors. Using instrumental variable and difference-in-discontinuities approaches, we find that, while carbon pricing generally increases green innovation, knowledge spillovers attenuate this effect. Technology-neutral R&D tax credits aiming to address the appropriability challenge do as well. Our findings highlight the importance of considering market failure interdependence when designing policy that aims to steer the direction of innovation.

Contact: Cristina Rujan

This paper develops a novel procedure for proxying economic activity with daytime satellite imagery across time periods and spatial units, for which reliable data on economic activity are otherwise not available. In developing this unique proxy, we apply machine-learning techniques to a historical time series of daytime satellite imagery dating back to 1984. Compared to satellite data on night light intensity, another increasingly used economic proxy, our proxy more precisely predicts economic activity at smaller regional levels and over longer time horizons. We demonstrate our measure's usefulness for the example of Germany, where data on economic activity are unavailable for detailed regional levels and historical time series. This is especially true for areas of East Germany before reunification. Our procedure is generalizable to other settings, and yields great potential for analyzing historical economic developments, evaluating local policy reforms, and controlling for economic activity at highly disaggregated regional levels in econometric applications.

Contact: Michael E. Rose

Do VCs Help to Overcome Information Asymmetry due to Cultural Distance in Potential Acquisitions
Presenter: Gresa Latifi (TUM) (joint work with M. Colombo, J. Henkel, and B. Montanaro)
Discussant: Giulia Solinas (ISTO)

Government funding of innovation can have a significant impact not only on the rate of technical change, but also on its direction. In this paper, we examine the role that government grants and government departments played in the development of artificial intelligence (AI), an emergent general-purpose technology with the potential to revolutionize many aspects of the economy and society. We analyze all AI patents filed at the US Patent and Trademark Office and develop network measures that capture each patent’s influence on all possible sequences of follow-on innovation. By identifying the effect of patents on technological trajectories, we are able to account for the long-term cumulative impact of new knowledge not captured by standard patent citation measures. We show that patents funded by government grants, but above all patents filed by federal agencies and state departments, profoundly influenced the development of AI. These long-term effects were especially significant in early phases, and weakened over time as private incentives took over. The results hold controlling for endogeneity, and are robust to alternative specifications.

Contact: Rainer Widmann

The question of who gains from high-quality entrepreneurship is crucial to understanding whether investments in incubating potentially innovative start-up firms will produce socially beneficial outcomes. We attempt to bring new evidence to this question by combining new aggregate measures of local area income inequality and income mobility with measures of entrepreneurship from Guzman and Stern (2020). Our new aggregate measures are generated by linking American Community Survey data with the universe of IRS 1040 tax returns. In both fixed effects and IV models using a Bartik-style instrument, we find that entrepreneurship increases income inequality. Further, we find that this increase in income inequality arises due to the fact that almost all of the individual gains associated with increased entrepreneurship accrue to the top 10 percent of the income distribution. While we find mixed evidence for small positive effects of entrepreneurship lower on the income distribution, we find little if any evidence that entrepreneurship increases income mobility. (Joint work with John Voorheis)

Contact: Fabian Gaessler