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on Business Economics |
| By: | Marco Grazzi; Nadia Jacoby; Tania Treibich |
| Abstract: | Although the relation between investment and economic growth has been well established in the macroeconomic literature, the existence of a similar link at firm level has been challenged by empirical work. This paper investigates the channels linking investment and firm performance in the French and Italian manufacturing industries by proposing a novel methodology to identify investment spikes, which corrects for size dependence. While maintaining the desired properties of a spike measure, our chosen proxy accounts for the expected relation between investment and firm performance. Ex-ante, more efficient and fast growing firms demonstrate a higher probability to invest; in turn, following an investment spike, the group of investing firms shows further performance gains. We show also that expansionary investment episodes, proxied by the opening of new plants, have a negative effect on profitability but are associated with higher sales and higher levels of employment. |
| Keywords: | Firm heterogeneity, investment spike, industrial dynamics, corporate performance, capital accumulation, technical change |
| JEL: | C14 D22 D24 D92 E22 L11 L23 L60 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2013-09&r=bec |
| By: | Luca Lambertini (Department of Economics, University of Bologna and Rimini Centre for Economic Analysis, Italy) |
| Abstract: | The model proposed in this paper investigates a differential Cournot oligopoly game with nonrenewable resource exploitation, in which each firm may exploit either its own private pool or a common pool jointly with the rivals. Firms use a deterministic technology to invest in exploration activities. There emerges that (i) the individual exploration effort is higher when each firms has exclusive rights on a pool of its own, and (ii) depending on whether each firm has access to its own pool or all firms exploit a common one, the aggregate exploration effort is either increasing or constant in the number of firms. |
| Keywords: | di¤erential games, natural resources, oligopoly |
| JEL: | C73 L13 Q30 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:25_13&r=bec |
| By: | Maria Alipranti (University of Crete); Emmanuel Petrakis (Department of Economics, University of Crete, Greece) |
| Abstract: | The present paper compares the Cournot and Bertrand equilibrium outcomes and social welfare in vertically related markets with upstream monopolistic market structure, where the trade between the upstream monopolist and the downstream firms is conducted via two-part tariffs contracts. We show that the equilibrium quantities, the profits of the downstream firms, the consumers' surplus and the social welfare are always higher under Cournot final market competition than under Bertrand final market competition. On the contrary the equilibrium profits of the upstream monopolist under Bertrand market competition always exceed those obtained under Cournot market competition. |
| Keywords: | Vertical relations, Betrand, Cournot, Two-part tariffs |
| JEL: | L13 L22 D43 |
| Date: | 2012–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:1305&r=bec |
| By: | Antonella Nocco; Gianmarco I. P. Ottaviano; Matteo Salto |
| Abstract: | After some decades of relative oblivion, the interest in the optimality properties of monopolistic competition has recently re-emerged due to the availability of an appropriate and parsimonious framework to deal with firm heterogeneity. Within this framework we show that non-separable utility, variable demand elasticity and endogenous firm heterogeneity cause the market equilibrium to err in many ways, concerning the number of products, the size and the choice of producers, the overall size of the monopolistically competitive sector. More crucially with respect to the existing literature, we also show that the extent of the errors depends on the degree of firm heterogeneity. In particular, the inefficiency of the market equilibrium seems to be largest when selection among heterogeneous firms is needed most, that is, when there are relatively many firms with low productivity and relatively few firms with high productivity. |
| Keywords: | monopolistic competition, product diversity, heterogeneity, selection, welfare |
| JEL: | D4 D6 F1 L0 L1 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1206&r=bec |
| By: | Gale Boyd; Mark Curtis |
| Abstract: | In this paper we merge a well-cited survey of firm management practices into confidential U.S. Census microdata to examine whether generic, i.e. non-energy specific, firm management practices, ”spillover” to enhance energy efficiency in the United States. We find the relationship in U.S. plants to be more nuanced than past research on UK plants has suggested. Most management techniques have beneficial spillovers to energy efficiency, but an emphasis on generic targets, conditional on other management practices, results in spillovers that increase energy intensity. Our specification controls for industry specific effects at a detailed 6-digit NAICS level and shows that this result is stronger for firms in energy intensive industries. We interpret the empirical result that generic management practices do not necessarily spillover to improved energy performance as evidence of an “energy management gap.” |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-25&r=bec |
| By: | Antonio Accetturo (Bank of Italy, Italy); Valter Di Giacinto (Bank of Italy, Italy); Giacinto Micucci (Bank of Italy, Italy); Marcello Pagnini (Bank of Italy, Italy) |
| Abstract: | Two main hypotheses are usually put forward to explain the productivity advantages of larger cities: agglomeration economies and firm selection. Combes et al. (2012) propose an empirical approach to disentangle these two effects and fail to find any impact of selection on local productivity differences. We theoretically show that selection effects do emerge when asymmetric trade and entry costs and different spatial scale at which agglomeration and selection may work are properly taken into account. The empirical findings confirm that agglomeration effects play a major role. However, they also show a substantial increase in the importance of the selection effect when asymmetric trade costs and a different spatial scale are taken into account. |
| Keywords: | agglomeration economies, firm selection, market size, entry costs, openness to trade |
| JEL: | C52 R12 D24 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:24_13&r=bec |
| By: | Hiroshi Osano (Institute of Economic Research, Kyoto University); Keiichi Hori (Faculty of Economics, Ritsumeikan University) |
| Abstract: | This paper explores a continuous-time agency model with double moral hazard. Using a venture capitalist—entrepreneur relationship where a manager provides unobservable effort while a venture capitalist (VC) both supplies unobservable effort and chooses the optimal timing of the initial public offering (IPO) with an irreversible investment, we show that optimal IPO timing is earlier under double moral hazard than under single moral hazard. Our results also indicate that the manager's compensation tends to be paid earlier under double moral hazard. We also derive several comparative static results for the IPO timing and managerial compensation profile, all of which provide new empirically testable implications. Usefully, even where the VC does not completely exit with the IPO, such that there is a requirement for a multiagent analysis after the IPO, most of our results remain unchanged. In addition, our model applies to not only the VC exit through the M&A (Mergers and Acquisitions) process but also the dissolution of joint ventures and corporate spin-offs. |
| Keywords: | two-sided moral hazard, IPO timing, managerial compensation, dynamic incentives, spin-offs |
| JEL: | D82 D86 G24 G34 M12 M51 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:863&r=bec |
| By: | Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | We assess the impact of the location of genuinely new ventures and spinoffs on these firms’ survival, productivity and growth. The study distinguishes between four different categories of locations: metro cities, metro regions, urban areas, and rural areas. Using a unique database covering more than 23,000 new entrants between 2000 and 2004 in Sweden and observing them for 5 years, several conclusions may be drawn from our study. First, there is a substantial difference in ex-post entry performance between the manufacturing and service sectors. Second, the proposed superiority of start-ups by ex-employees depends on the performance measures and the sector. Third, knowledge and technology intensity of the industry matter for the viability of the new firms. |
| Keywords: | Location; New ventures; Survival; Productivity; Growth |
| JEL: | L25 L26 M13 O47 R11 |
| Date: | 2013–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0308&r=bec |
| By: | Roberto Gabriele; Diego Giuliani; Marco Corsino; Giuseppe Espa |
| Abstract: | The paper proposes a novel methodology to assess the role of ÒlocationÓ in shaping firm growth. Along with traditional determinants (e.g., age, size and financial constraints), geographical location is alleged to drive firm growth. The current literature typically relies on location variables that suffer from a lack of empirical robustness (Combes et al., 2008; Duranton and Overman, 2005; Arbia et al., 2012; Giuliani et al., 2012): indeed arbitrary definitions of the spatial observational units (such as provinces, regions or municipalities) introduce a statistical bias arising from the discretionally chosen definition of space. To address these shortcomings, we use the GetisÕ local K-function (Getis, 1984) at the firm level. This measure allows us to distinguish between Marshallian and Jacobs externalities. The analysis exploits a new database comprising single-unit Italian firms operating in the manufacturing sector. Empirical results show that firms exhibit a differential ability to grow due to different kinds of externalities: small firms benefit more from Marshallian externalities, while medium-large firms exploit also Jacobian externalities. |
| Keywords: | spatial concentration, GetisÕ local K-function, localization externalities |
| JEL: | L25 R11 O30 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpem:2013/06&r=bec |
| By: | Maria José Gil-Moltó; Dimitrios Varvarigos |
| Abstract: | We model an industry that supplies intermediate goods in a growing economy. Agents can choose whether to provide labour or to become firm owners and compete in the industry. The idea that entry is determined through occupational choice has major implications for the economy’s intrinsic dynamics. Particularly, the results show that economic dynamics are governed by endogenous volatility in the determination of both the number of industry entrants and in the growth rate of output. Consequently, we argue that occupational choice and the structural characteristics of the endogenous market structure can act as both the impulse source and the propagation mechanism of economic fluctuations. |
| Keywords: | Overlapping generations; Endogenous cycles; Firms’ entry; Industry Dynamics |
| JEL: | E32 L16 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:13/05&r=bec |
| By: | Yaniv Yedid-Levi (The University of British Columbia) |
| Abstract: | In recessions, employment falls in all major sectors. Positive correlation of employment across sectors is a puzzle, because a standard two-sector business-cycle model driven by aggregate productivity shocks predicts negative correlation of total hours of work in the consumption-goods sector and the investment-goods sector. I start from the observation that most of the variability of total hours worked takes the form of variations in the number of workers. Hours per employed worker is only a secondary source of variation. The exten- sive margin is therefore critical in understanding the positive correlation of sectoral labor market variables, yet neglected by existing studies. This paper advances the literature on cross-sectoral correlation of employment by making unemployment an explicit feature of the model. I construct a two sector model with search and matching friction, capital ad- justment costs, and partial wage stickiness. The model explains the positive cross-sectoral correlation through movements of workers in both sectors into and out of unemployment. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed012:677&r=bec |