Managing dynamic competition

In many important high-technology markets, including software development, data processing, communications, aeronautics, and defense, suppliers learn through experience how to provide better service at lower cost. This paper examines how a buyer designs dynamic competition among rival suppliers to exploit learning economies while minimizing the costs of becoming locked in to one producer. Strategies for controlling dynamic competition include the handicapping of more efficient suppliers in procurement competitions, the protection and allocation of intellectual property, and the sharing of information among rival suppliers. (JEL C73, D44, L10).

Intraspecific variation in a predator affects community structure and cascading trophic interactions.

Intraspecific phenotypic variation in ecologically important traits is widespread and important for evolutionary processes, but its effects on community and ecosystem processes are poorly understood. We use life history differences among populations of alewives, Alosa pseudoharengus, to test the effects of intraspecific phenotypic variation in a predator on pelagic zooplankton community structure and the strength of cascading trophic interactions. We focus on the effects of differences in (1) the duration of residence in fresh water (either seasonal or year-round) and (2) differences in foraging morphology, both of which may strongly influence interactions between alewives and their prey. We measured zooplankton community structure, algal biomass, and spring total phosphorus in lakes that contained landlocked, anadromous, or no alewives. Both the duration of residence and the intraspecific variation in foraging morphology strongly influenced zooplankton community structure. Lakes with landlocked alewives had small-bodied zooplankton year-round, and lakes with no alewives had large-bodied zooplankton year-round. In contrast, zooplankton communities in lakes with anadromous alewives cycled between large-bodied zooplankton in the winter and spring and small-bodied zooplankton in the summer. In summer, differences in feeding morphology of alewives caused zooplankton biomass to be lower and body size to be smaller in lakes with anadromous alewives than in lakes with landlocked alewives. Furthermore, intraspecific variation altered the strength of the trophic cascade caused by alewives. Our results demonstrate that intraspecific phenotypic variation of predators can regulate community structure and ecosystem processes by modifying the form and strength of complex trophic interactions.

Entry and competition in generic biologics

Patents for several blockbuster biological products are expected to expire soon. The Food and Drug Administration is examining whether biologies can and should be treated like pharmaceuticals with regard to generics. In contrast with pharmaceuticals, which are manufactured through chemical synthesis, biologies are manufactured through fermentation, a process that is more variable and costly. Regulators might require extensive clinical testing of generic biologies to demonstrate equivalence to the branded product. The focus of the debate on generic biologies has been on legal and health concerns, but there are important economic implications. We combine a theoretical model of generic biologies with regression estimates from generic pharmaceuticals to estimate market entry and prices in the generic biologic market. We find that generic biologies will have high fixed costs from clinical testing and from manufacturing, so there will be less entry than would be expected for generic pharmaceuticals. With fewer generic competitors, generic biologies will be relatively close in price to branded biologies. Policy makers should be prudent in estimating financial benefits of generic biologies for consumers and payers. We also examine possible government strategies to promote generic competition. Copyright © 2007 John Wiley & Sons, Ltd.

Evolving brand-name and generic drug competition may warrant a revision of the Hatch-Waxman Act.

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act's intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs' patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators. Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation. It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.

Decision making across social contexts: Competition increases preferences for risk in chimpanzees and bonobos

Context can have a powerful influence on decision-making strategies in humans. In particular, people sometimes shift their economic preferences depending on the broader social context, such as the presence of potential competitors or mating partners. Despite the important role of competition in primate conspecific interactions, as well as evidence that competitive social contexts impact primates' social cognitive skills, there has been little study of how social context influences the strategies that nonhumans show when making decisions about the value of resources. Here we investigate the impact of social context on preferences for risk (variability in payoffs) in our two closest phylogenetic relatives, chimpanzees, Pan troglodytes, and bonobos, Pan paniscus. In a first study, we examine the impact of competition on patterns of risky choice. In a second study, we examine whether a positive play context affects risky choices. We find that (1) apes are more likely to choose the risky option when making decisions in a competitive context; and (2) the play context did not influence their risk preferences. Overall these results suggest that some types of social contexts can shift patterns of decision making in nonhuman apes, much like in humans. Comparative studies of chimpanzees and bonobos can therefore help illuminate the evolutionary processes shaping human economic behaviour. © 2012 The Association for the Study of Animal Behaviour.

Inhibition-Induced Forgetting Results from Resource Competition between Response Inhibition and Memory Encoding Processes.

UNLABELLED: Response inhibition is a key component of executive control, but its relation to other cognitive processes is not well understood. We recently documented the "inhibition-induced forgetting effect": no-go cues are remembered more poorly than go cues. We attributed this effect to central-resource competition, whereby response inhibition saps attention away from memory encoding. However, this proposal is difficult to test with behavioral means alone. We therefore used fMRI in humans to test two neural predictions of the "common resource hypothesis": (1) brain regions associated with response inhibition should exhibit greater resource demands during encoding of subsequently forgotten than remembered no-go cues; and (2) this higher inhibitory resource demand should lead to memory encoding regions having less resources available during encoding of subsequently forgotten no-go cues. Participants categorized face stimuli by gender in a go/no-go task and, following a delay, performed a surprise recognition memory test for those faces. Replicating previous findings, memory was worse for no-go than for go stimuli. Crucially, forgetting of no-go cues was predicted by high inhibitory resource demand, as quantified by the trial-by-trial ratio of activity in neural "no-go" versus "go" networks. Moreover, this index of inhibitory demand exhibited an inverse trial-by-trial relationship with activity in brain regions responsible for the encoding of no-go cues into memory, notably the ventrolateral prefrontal cortex. This seesaw pattern between the neural resource demand of response inhibition and activity related to memory encoding directly supports the hypothesis that response inhibition temporarily saps attentional resources away from stimulus processing. SIGNIFICANCE STATEMENT: Recent behavioral experiments showed that inhibiting a motor response to a stimulus (a "no-go cue") impairs subsequent memory for that cue. Here, we used fMRI to test whether this "inhibition-induced forgetting effect" is caused by competition for neural resources between the processes of response inhibition and memory encoding. We found that trial-by-trial variations in neural inhibitory resource demand predicted subsequent forgetting of no-go cues and that higher inhibitory demand was furthermore associated with lower concurrent activation in brain regions responsible for successful memory encoding of no-go cues. Thus, motor inhibition and stimulus encoding appear to compete with each other: when more resources have to be devoted to inhibiting action, less are available for encoding sensory stimuli.