Fractional IP ownership limits licensing: highly fractionalized songs are used less in movie soundtracks. Merger-driven copyright consolidation raises licensing, from Alberto Galasso and @CaouiHadi https://t.co/CL6T8ZAUd9

New CEPR Discussion Paper-DP19686 Fractional Ownership and #Copyright Licensing: Evidence from the Music Industry El Hadi Caoui @CaouiHadi @UofT, Alberto Galasso @AlbertoGalasso @rotmanschool @UofT https://t.co/ARxsXDC1Hp #CEPR_IO #CEPR_OE #EconTwitter

Happy to share that my book “The Management of Innovation” will be published this May. It summarizes economics and management research, providing insights on how firms can manage and create technology capital Pre-orders at https://t.co/XAQCMOOqV3 #IP #technology #innovation

We study how supply disruptions and the ensuing diversification by buyers affect market structure in a crucial component of the internet supply chain: the internet backbone. (picture credit: infrapedia)

We have more work on this industry (looking at the role played by large content providers such as Meta/Google/Microsoft) coming soon..

There is more than can be summarized here, you can find the latest draft of the paper at: https://t.co/6qO4LnxliB

Second, we ask if the level of diversity supplied by the market is efficient. We distinguish 2 sources of distortions (business stealing & diversity effects) which lead to excessive/insufficient diversity. We find that business-stealing dominates, leading to a welfare loss of 6%.

In a first counterfactual, we show that diversification is an important determinant of long-run market structure: it explains 20% of entry/investment in new cables, 35% of CS created over the sample period.

To estimate the dynamic parameters, we implement several existing estimators (1-PML, NPL) and the more recent spectral algorithm (@vaguirregabiria & Marcoux), an approach robust to fixed-point instability which avoids the approximation of high-dimensional Jacobians.

We estimate demand for bandwidth (including buyers’ preference for network diversity), and cable operators’ various cost components.

We use a dynamic oligopoly game where cable operators decide every period whether to enter a market (connecting a country pair), compete in supplying bandwidth, or exit.

We leverage new data on the industry, including detailed information on cable characteristics, faults, bandwidth prices, and cross-border data flows over 2005-2021.

It's an ideal setting to study this question: cables break frequently (~100 to 200 failures/year), and the industry places high value on network diversity, i.e., provisioning bandwidth over multiple paths between points A and B.

This is a global network of hundreds of undersea fiber-optic cables, carrying over 98% of international internet traffic. It is essential to well-functioning global financial systems (trillions of $ transacted/day via undersea cables)

We study how supply disruptions and the ensuing diversification by buyers affect market structure in a crucial component of the internet supply chain: the internet backbone. (picture credit: infrapedia)

Diversification has significant implications for entry/exit dynamics and how suppliers compete. Moreover, firms’ private incentives to increase diversity may not reflect the social benefits.

Diversification is a natural response in the face of disruptions: e.g., sourcing from multiple suppliers and/or relying on alternative links in a supply network.

Supply disruptions are a major concern in various industries and are exacerbated by events such as pandemics, climate shocks and extreme weather events, or geopolitical tensions.

New Working Paper: "Network Diversity, Market Entry, and the Global Internet Backbone" with Andrew Steck. We study how supply disruptions affect long-run market structure, in an important/understudied setting: the global internet backbone. #EconTwitter https://t.co/6qO4LnxliB