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DTSTART:20070311T020000
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DTSTAMP:20260203T093715
DTSTART;TZID=America/Detroit:20260414T113000
DTEND;TZID=America/Detroit:20260414T125000
SUMMARY:Workshop / Seminar:Lock-in and productive innovations: implications for firm-to-firm innovation pass-through
DESCRIPTION:Firms innovate to improve efficiency and reduce their costs of production (productive innovations) and to increase customer dependency by reducing the substitutability of their products (lock-in innovations). In this paper\, I quantitatively study the macroeconomic implications of lock-in innovations for aggregate productivity and market power. I develop a theoretical framework that allows firms to invest in lock-in innovations by reducing product substitutability\, while also nesting standard macroeconomic models of productive innovations. A key prediction of the model is that productive innovations by suppliers increase customer firms’ sales by lowering input costs\, while lock-in innovations decrease customer firms' sales by allowing suppliers to charge higher prices for products that are harder to substitute. I use this theoretical insight to identify the nature of innovation in the data and calibrate the model to the U.S. economy. Informed by the observed changes in the response of customer firms' sales to their suppliers' innovations\, I find that the incidence of lock-in innovations among high-markup firms has increased significantly in the post-2000 period. Moreover\, had the incidence of lock-in innovations remained at pre-2000 levels\, observed aggregate productivity would have been 3% higher\, median markups would have stayed at pre-2000 levels\, and markup dispersion would have been 9% lower.
UID:143302-21892657@events.umich.edu
URL:https://events.umich.edu/event/143302
CLASS:PUBLIC
STATUS:CONFIRMED
CATEGORIES:Economics,Macroeconomics,seminar
LOCATION:North Quad - 4325
CONTACT:
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