| The dissertation consists of three interrelated chapters in the field of technology innovation management and policy that examine how specialization is limited by market size, technological compatibility in the use of complementary technologies, and the role of research and development (R and D) in the technology transactions.; In the first chapter, we test whether the number of specialized input suppliers is increasing in the market size in many-users sense. We develop an empirical model which explicitly considers the structure of the market demand and supply for the input, using plant design and engineering services in the chemical industry for the model. The paper is based on Bresnahan and Gambardella's (1996) theoretical work that argues that division of labor is limited by market growth in the "many-users" sense compared with the "few large-volume-users" sense, which expands Stigler's (1951) idea.; The empirical analysis shows that the number of input suppliers increases when the market composition increases in the "many-users" sense. Additionally, the increasing share of the big firms' investment is likely to decrease the small firms' investment, which decreases the number of input suppliers in the market. Moreover, small firms' investment increases by the increasing number of input suppliers.; The second chapter examines whether the technology buyer's in-house R and D decreases the price of the technology, using the evidence from the pharmaceutical industry. Technology licensing is often seen as a substitute for in-house R and D (Gallini and Winter, 1985, and Katz and Shapiro, 1987). However, in technology markets, better-informed buyers may fare better, which implies that in-house R and D complements technology licensing by enhancing the ability to utilize technological opportunities (Arora and Gambardella, 1994, and Cohen and Levinthal, 1990). Moreover, according to Gans and Stern (1999), firms engage in R and D spending in order to improve their bargaining position as buyers in the technology market.; We find that R and D spending does improve the bargaining positions of licensees, although the effect is small. In the absence of the bargaining power effect, R and D spending would be about 6 percent lower than it is. We also find that the entry of technology licensors reduces firms' own R and D but has a positive overall effect on innovation.; The third chapter empirically examines the use of a technology in one segment depending on the availability of complementary technologies that are compatible (Church and Gandal, 1996, Bresnahan and Greenstein 1999). Assembling the establishment-level data of software usage, we develop a discrete choice model where users simultaneously choose to use an Internet protocol (IP)-based local area network operating system (LAN OS) and Internet applications.; The empirical results suggest that the effect of complementarity due to technological compatibility exists in the use of Internet applications and an IP-based LAN OS, conditioning the user characteristics associated with the use of the two technologies. For example, establishment size has a positive effect on the use of new Internet applications and an IP-based LAN OS, and establishments with higher internal programming capabilities are more likely to use Internet applications as well as an IP-based LAN OS. Moreover, establishments are more likely to use Internet applications when the affiliated establishments are more geographically dispersed. |
