Mitsuru 
(Michi) IGAMI is an Assistant Professor of Economics at Yale Department of Economics (and a SIEPR Visiting Assistant Professor at Stanford University, July 1, 2014 – June 30, 2015) and studies the economics of creative destruction, with emphasis on strategic industry dynamics. 


FIELDS OF SPECIALIZATION
  • Industrial Organization, Economics of Innovation, International Trade

UPCOMING PRESENTATIONS
  • 4/2/2015 U British Columbia: "Offshoring under Oligopoly"
  • 4/3/2015 U Chicago (Conference on Flows of Goods and Technologies in the Global Economy): "Offshoring under Oligopoly"
  • 4/21/2015 UC Berkeley (IO)"Mergers, Innovation, and Entry-Exit Dynamics"
  • 4/25/2015 International Industrial Organization Conference (Boston)"Mergers, Innovation, and Entry-Exit Dynamics"
  • 4/27/2015 Stanford (Junior Faculty Lunch): "Productivity, Innovation, and Patents in China"
  • 5/8/2015 Stanford (GSB): "Mergers, Innovation, and Entry-Exit Dynamics"
  • 5/22-23/2015 Washington U in St. Louis (CRES Foundations of Business Strategy Conference): "Mergers, Innovation, and Entry-Exit Dynamics"
  • 6/25-27/2015 Society for Economic Dynamics (Warsaw, Poland)"Offshoring under Oligopoly"
  • 8/17-21/2015 Econometric Society World Congress (Montreal, Canada)"Mergers, Innovation, and Entry-Exit Dynamics"
  • 10/2/2015 Purdue"Mergers, Innovation, and Entry-Exit Dynamics"

PUBLICATIONS & WORKING PAPERS


  • We measure the impact of mergers on competition, innovation, and welfare. We develop a dynamic oligopoly model of mergers, R&D, and entry/exit, and estimate it using data from the hard disk drive industry. We find mergers became a dominant mode of exit in the later phase of industry consolidation and often generated productivity improvement (i.e., synergies). Our counterfactual simulation suggests a more restrictive antitrust policy may not necessarily increase welfare because a higher exit rate partially o§sets its pro-competitive effect, and R&D does not fully make up for the forgone synergies.


    • 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). Three findings emerge: (1) patents “predict” innovations better than a random guess, and a simple refinement makes them more useful; (2) conditional on innovating, conglomerates and larger firms patent more than specialized startups and smaller firms; and (3) patent reforms seem to make the patent-innovation relationship nonstationary. These results suggest researchers to use caution when comparing patents of different types of firms and across years because ill-informed R&D policy interventions may entail detrimental impacts on economic growth and welfare.

      • Cannibalization and Preemptive Entry in Heterogeneous Markets (December 3, 2014) with Nathan Yang, second revision requested by Quantitative Economics. Slides  

      • We study cannibalization and preemption in the evolution of market structure. Because a market can accommodate only a finite number of outlets, forward-looking firms face the tradeoff between cannibalization and preemption. We develop a dynamic entry model of multi-store oligopoly with heterogeneous markets, and estimate it using data on hamburger chains in Canada (1970–2005). Unobserved heterogeneity across geographical markets creates an endogeneity problem that could lead to biased estimates of competition, which we address by combining the procedures proposed by Kasahara and Shimotsu (2009), Arcidiacono and Miller (2011), and Bajari, Benkard, and Levin (2007), respectively. The results suggest (1) cannibalization is the main determinant of profit and entry, (2) preemptive motives could make the timing of McDonald’s entry earlier by seven years, and (3) the omission of unobserved market heterogeneity attenuates the estimates of competition.
        * Non-technical summary by The Economist (May 3, 2014)
        * Non-technical summary by Tim Harford (The Undercover Economist) for The Financial Times (February 6, 2015)

        • Offshoring under Oligopoly (October 10, 2014). Slides

        • This paper uncovers a novel pattern of offshoring and market structure in a high-tech industry, and proposes a simple oligopoly model to explain it. Specifically, the hard disk drive industry (1976–98) witnessed massive waves of entry, exit, and the relocation of manufacturing plants to low-cost countries, in which shakeouts occurred predominantly among home firms and almost all survivors were offshore firms. I build and estimate a dynamic offshoring game with entry/exit to explain these facts, and then investigate the relationship between offshoring and market structure as well as the impacts of hypothetical government interventions.

          • Estimating the Innovator’s Dilemma: Structural Analysis of Creative Destruction in the Hard Disk Drive Industry (August 20, 2014), second revision requested by the Journal of Political Economy. Slides  

            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.
            * Non-technical summary at Nikkei Business Online (in Japanese, January 5, 2015)

          • Market Power in International Commodity Trade: The Case of Coffee (February 26, 2014), forthcoming, the Journal of Industrial Economics.
          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
          • Moore's Law, since June 2013.
          • Productivity and Innovation in China (with Mo Xiao and Yuyu Chen), since September 2014.

          • 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.