Mitsuru IGAMI (Michi) is an assistant professor at Yale Department of Economics and studies the economics of creative destruction, with emphasis on strategic industry dynamics.
FIELDS OF SPECIALIZATION
- 2/27/2014 Yale: "Offshoring under Oligopoly"
- 3/11/2014 Boston College: "Offshoring under Oligopoly" (cancelled)
- 3/12/2014 U Wisconsin – Madison: "Cannibalization and Preemptive Entry"
- 4/11/2014 U Oklahoma: "Cannibalization and Preemptive Entry"
- 5/4–5/2014 Ghoshal Conference on Managerially Relevant Research, London Business School: "Estimating the Innovator's Dilemma"
- 6/19–20/2014 Searle Center Conference on Innovation Economics, Northwestern University School of Law: "Estimating the Innovator's Dilemma"
- 7/2–3/2014 CIRPÉE Conference on Industrial Organization, HEC Montréal: TBD
PUBLICATIONS & WORKING PAPERS
This paper investigates the relationship between patenting and innovation. We assess the usefulness of patent statistics as an indicator of innovation using a direct measure of innovation in the hard disk industry (1976–98). The results suggest patents predict innovation better than a random guess, but also highlight the importance of technological assessments to determine relevant patents. Firm heterogeneity in patenting propensity and historical changes in the patent regime appear to lead to systematic prediction errors.
- Cannibalization and Preemptive Entry (August 20, 2013), with Nathan Yang. Slides
We study cannibalization and preemption in the evolution of market structure. Because a market can accommodate only a finite number of products/outlets, forward-looking firms face the tradeoff between cannibalization and preemption. We develop a dynamic entry model of multi-store oligopoly, and estimate it using data on hamburger chains in Canada (1970–2005). The results suggest cannibalization is the main determinant of profit and entry. Moreover, counterfactual simulations imply preemptive motives generate highly non-monotonic entry strategies, and caution against the use of static approaches when market structure is evolving.
- Offshoring under Oligopoly (March 6, 2014). Slides
This paper empirically investigates high-tech firms’ decisions to relocate manufacturing plants to low-cost countries. Computers and electronics have undergone sector-wide offshoring and typically feature an oligopolistic market structure, in which firms’ profits depend on their own and rivals’ costs. To incorporate the endogenous evolution of offshoring incentives and market structure, I model and estimate a dynamic offshoring game with entry/exit, using unique data on hard disk drive (HDD) manufacturers. The results suggest that due to competitive pressure, the incentives to offshore increase as more rivals offshore. I then assess the welfare impacts of government interventions and find that (1) offshoring is pro-competitive, (2) discouraging offshoring would risk the survival of domestic firms, and (3) governments in Nash equilibrium would engage in either a subsidy race to drive out foreign firms, or free-riding on foreign firms’ offshoring efforts, depending on policy objectives.
This paper studies strategic industry dynamics of creative destruction in which firms and technologies turn over. Theories predict cannibalization between existing and new products delays incumbents’ innovation, whereas preemptive motives accelerate it, and incumbents’ cost (dis)advantage relative to that of entrants would further reinforce these tendencies. To empirically assess these three forces, I develop and estimate a dynamic oligopoly model using a unique panel dataset of hard disk drive (HDD) manufacturers (1981–98). The results suggest that despite strong preemptive motives and a substantial cost advantage over entrants, incumbents are reluctant to innovate because of cannibalization, which can explain at least 66% of the incumbent-entrant innovation gap. I then assess hypothetical policy interventions concerning broad patents and trade barriers, and find the industry’s welfare trajectory difficult to outperform.
This paper studies the impact of market power on international commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences. The results suggest the International Coffee Agreement (ICA, 1965-89) raised its price by 75% above the Cournot-competitive level, annually transferring approximately $12 billion from consumers to exporting countries, and its lapse in 1989 explains four-fifths of the subsequent price decline, that is, the "coffee crisis."
This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets' entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These findings highlight the role of store size as an important dimension of product differentiation. Size-based entry regulations would appear to protect big incumbents, at the expense of small incumbents and potential entrants.
As the common theme across my papers, I study strategic industry dynamics over the long term. Since the time of Schumpeter, “creative destruction” has captured the imagination of economists. Although commonly understood as the replacement of old technologies by new ones, its true significance lies not in the transition of technologies per se but in either the reluctance or inability of old winners to innovate when faced with potential and actual entrants. This is why I particularly focus on strategic industry dynamics.
PROJECTS UNDER CONSTRUCTION
This paper studies the effects
of age and experience on creativity. I construct a unique panel dataset of 600
mangas and 286 artists from the population of works published at Weekly Jump (1968–2012). Preliminary
data analysis suggests that: (1) creativity declines with age; (2) creativity
increases with experience; and (3) the benefits of experience diminishes with
age. However, these results might suffer from the survivorship bias because
some artists quit their career at Weekly Jump after publishing a few unpopular
mangas. Since only talented artists may choose to accumulate experience, my
current estimates likely confound the effects of age and experience with that
of unobserved talent. In the future version of this paper, I plan to address
this selection issue by incorporating the dynamics of artists' career decisions
into a structural model.
* Click here in case you have not heard about Weekly Jump, one of the world's most prominent comic magazines.