IdEP Seminar, Amanda De Pirro - "Of Shrimp and Men: Innovation, Competition and Product Diversity"
Institute of Economics
Date: 26.01.2024 / 12:30 - 13:30
Online in MS Teams
We build a model showing how a cost-reducing innovation can hurt the profit of the innovator by decreasing product diversity and strengthening competition. An innovation increasing social welfare may never be delivered by the private sector, regardless of how much of its R&D is subsidized. The only way is for the government to fully provide it. We illustrate this result using data from the shrimp industry. In the late 1990s, a US governmental program designed a new breed reducing the production cost of a variety of shrimp. This innovation gave a temporary boost to the profit of American producers. Over time, other countries abandoned their native production to adopt the new breed. In this catch-up phase, US producers not only lost their cost advantage, but also the market power derived from product differentiation.
Teams link
Meeting ID: 370 478 022 202
Passcode: qEYwM9
