Absorptive capacity, knowledge spillovers and incentive contracts

Luis Aguiar and Philippe Gagnepain ()
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Philippe Gagnepain: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We attempt to identify and measure knowledge spillovers in the French urban transport sector, which is strongly regulated and where a few large industrial groups are in charge of operating several urban networks. We build and estimate a structural cost model where the service is regulated by a local government and is provided by a single operator. Knowledge spillovers are directly linked to the know-how of a specific group, but they also depend on the incentive power of the regulatory contract which shapes the effort of the local managers. Exerting an effort in a specific network allows a cost reduction in this network, but it also benefits other networks that are members of the same group. We find that diversity of knowledge across operators of the same group improves absorptive capacity and increases the flow of spillovers. Simulation exercises provide evidence of significant reductions in total operating costs following the enlargement of industrial groups.

Keywords: Knowledge spillovers; Absorptive capacity; Cost incentives; Effort; Diversity of knowledge; Public transport (search for similar items in EconPapers)
Date: 2022-05
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03673238v1
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Published in International Journal of Industrial Organization, 2022, 82, ⟨10.1016/j.ijindorg.2022.102830⟩

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Related works:
Journal Article: Absorptive capacity, knowledge spillovers and incentive contracts (2022)
Working Paper: Absorptive capacity, knowledge spillovers and incentive contracts (2022)
Working Paper: Absorptive Capacity, Knowledge Spillovers and Incentive Contracts (2021)
Working Paper: Absorptive Capacity, Knowledge Spillovers and Incentive Contracts (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-03673238

DOI: 10.1016/j.ijindorg.2022.102830

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