Research Interests

    • Innovation 
    • Multinational Enterprises
    • International Trade
    • Industrial Organization
    • Competition Policy

Current Research

How antitrust can spur innovation: ​Bell Labs and the 1956 consent decree

with Martin Watzinger, Thomas Fackler and Markus Nagler
Download /VoxEU/ Link to CEPR Discussion Paper

Is compulsory licensing an effective antitrust remedy to increase innovation? To answer this question, we analyze the 1956 consent decree which settled an antitrust lawsuit against Bell, a vertically integrated monopolist charged with foreclosing the telecommunications equipment market. Bell was forced to license all its existing patents royalty-free, including those not related to telecommunications. We show that this led to a long-lasting increase in innovation but only in markets outside the telecommunications industry. Within telecommunications, where Bell continued to exclude competitors, we find no effect. Compulsory licensing is an effective antitrust remedy only if incumbents cannot foreclose the product markets.

Measuring the Spillovers of Venture Capital

with Martin Watzinger
Download full paper

We provide the first measurement of knowledge spillovers from venture capital-financed companies onto the patenting activities of other companies. These spillovers are eight times larger than those generated by the corporate R&D of established companies. The effects are heterogenous, depending on who generates the spillover and who is the likely recipient. In general, complex technology industries tend to be more conducive to spillovers than discrete technology industries. Spillovers originate mainly from investments in a small set of start-ups that are characterized by an inventor team with prior patenting experience and that have a patented technology before receiving their first round of investment. This points to a complementarity between the supply of venture capital on the one hand and access to experience and technology on the other hand. The methodological contribution of our paper is to develop a new measure for the spillover pool, combining elements of the citation-based and technological proximity-based approaches.

Multinational firms and tax havens

with Anna Gumpert and James Hines
Review of Economics and Statistics 2016, Vol. 98 (4), 713-727
 Substantially revised version of "The use of tax havens in exemption regimes" 2011, NBER working paper 17644.

Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently difficult and costly that only 20.4 percent of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a one percentage point higher foreign tax rate is associated with a 0.3 percentage point greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives, and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.

Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidence of Granularity

with Franziska Bremus, Claudia Buch and Katheryn Russ
2013, NBER working paper 19093.
Does the mere presence of big banks affect macroeconomic outcomes? In this paper, we develop a theory of granularity (Gabaix, 2011) for the banking sector, introducing Bertrand competition and heterogeneous banks charging variable markups. Using this framework, we show conditions under which idiosyncratic shocks to bank lending can generate aggregate fluctuations in the credit supply when the banking sector is highly concentrated. We empirically assess the relevance of these granular effects in banking using a linked micro-macro dataset of more than 80 countries for the years 1995-2009. The banking sector for many countries is indeed granular, as the right tail of the bank size distribution follows a power law. We then demonstrate granular effects in the banking sector on macroeconomic outcomes. The presence of big banks measured by high market concentration is associated with a positive and significant relationship between bank-level credit growth and aggregate growth of credit or gross domestic product.

Publications

Books

  • "Contracts in Trade and Transition: The Resurgence of Barter" (with Dalia Marin), Cambridge and London: MIT Press, 2002

Statements & Reports

  • Analyse der Beweggründe, der Ursachen und der Auswirkungen des so genannten Offshoring auf Arbeitsplätze und Wirtschaftsstruktur in Deutschland (mit Claudia Buch, Christian Arndt, Iris Kesternich, Anselm Mattes, Christian Mugele, Harald Strotmann), Gutachten erstellt im Auftrag des Bundesministeriums für Wirtschaft und Technologie, Tübingen/München  2007
  • Non-Horizontal Mergers Guidelines: Ten Principles, A Note by the EAGCP Merger-Subgroup, (mit Marc Ivaldi, Bruce Lyons, John van Reenen, Frank Verboven, Nikos Vettas, Xavier Vives), erstellt für die Economic Advisory Group for Competition Policy des Chief Economist, DG Competition, Europäische Kommission, Brüssel 2007