This paper presents a framework for valuing managerial flexibility within the context of product standardization. The framework originates in a major standardization problem concerning digital tape recording at Philips Electronics. We use insights from financial option theory to calculate the...

Poorly performing firms need to improve their profitability through restructuring their operations. In many cases this means downsizing by means of collective layoff of employees. Based on a unique sample of Belgian firms reporting collective layoffs this paper analyzes whether a firm dismisses...

On average the expected value at the moment of commercialization of an R&D project should remain constant during the different stages of new product development. Contrary to this intuition however, we find a systematic, non-constant pattern in the average expected value of an R&D project. First,...

In recent years, there has been a growing concern about the effect of globalisation on employment in most West European countries. More and more firms had to drastically restructure their operations in order to survive the rise in global competition. Restructuring often leads to a collective...

This paper examines how the option for licensing affects research and development (R&D) and social welfare. We find that if cost reduction from R&D is sufficiently small and there is an option of licensing, firms will do non-cooperative R&D. In absence of licensing, firms will do cooperative R&D...

In a world with private information about the quality of technology we find that there are situations where relatively more technologically superior firm will license its technology but relatively less technologically superior firm will not license its technology. This finding is opposite to the...

The theoretical literature on industrial organization has been argued that firms hold excess capacity to deter entry. However, empirical analysis did not provide much support to this hypothesis. In this paper we show that the dominant firms may hold excess capacity not for entry deterrence but...

The literature on technology licensing has ignored the importance of market power of the input supplier. In this paper we examine the impact of licensing in the downstream industry when the firms in the upstream industry have market power. We show that licensing in the downstream industry can...

Previous literature has mostly considered R&D and licensing activities separately. In this paper we examine the effect of licensing on R&D and social welfare. We show that the effect of licensing on the incentive for doing R&D is ambiguous and depends on the costs of doing R&D. We also show that...

This paper compares profits and consumer surplus under non-cooperation and collusion in the product market when the firms have the option for R&D before production. We show that whether R&D investment would be higher under non-cooperation or product market collusion depends on the R\&D...