Asia Pacific Industrial Organization Conference 2023

Publications Resource Allocation Among Competing Innovators Many innovative products are designed to satisfy the demand of specific target consumers; thus, the innovators will inevitably compete with each other in the product market. This paper investigates how a profit-maximizing principal should properly allocate her limited resources to support the innovations of multiple potentially competing innovators. The study finds that, as the available resources increase, the optimal diversification of investment may first increase and then decrease. By Yangguang Huang, Ying-Ju Chen, Pin Gao, Xiaoshuai Fan

• Investment strategies
• Market allocation
• Innovation
• Resource
• Competitive strategy

Publications Agglomeration, Misallocation, and (the Lack of) Competition Industrial agglomeration policies may limit competition. This study develops, validates, and applies a novel approach for measuring competition based on the comovement of markups and market shares among firms in the same location and industry. Then this study develops a model of how this reduction in competition affects aggregate income. In this paper, the authors apply their approach to the well-known special economic zones (SEZs) of China. This paper estimates that firms in SEZs exhibit cooperative pricing almost three times as intensively as firms outside SEZs. By Yao Amber Li, Wyatt J. Brooks, Joseph P. Kaboski

• China economy
• Competitiveness
• Internalizing
• Market shares
• Price competition

Publications Indemnification, Monitoring, and Competition: Evidence from R&D Contracts This article examines the adoption of indemnification clauses in research and development (R&D) contracts, in which a firm commits to reimbursing its agent against liabilities and legal costs. Indemnification achieves efficient risk sharing but dilutes the agent’s incentives to take precautions. Such incentives may be restored if the firm offers contingent indemnification and monitors the agent’s activities. Additionally, tougher competition can motivate the firm and agent to take more aggressive R&D activities, which leads to higher liability risks. By Xinyu Hua, Di Guo , Kun Jiang

• Law
• R&D
• Market competition
• Indemnification
• Pharmaceutical industry
• Legal costs
• Competitive strategy
• Contract theory