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on Business Economics |
| By: | Jie Ma (University of Business and Economics); Ian Wooton (Department of Economics, University of Strathclyde) |
| Abstract: | We analyse a firm's investment in a regional economy composed of two countries. The firm already manufactures a horizontally differentiated good in the region and we determine the firm's equilibrium location choice for the new good and the welfare consequences of fiscal competition between the two countries. We find that the firm's location decision is efficient. Fiscal competition does not affect the location of production but redistributes rents between the firm and the taxpayers of the host country. The implications of endogenous product differentiation and the new good being produced by a competing firm are also considered. As far as we know the tax competition literature has not previously addressed the issue of product differentiation. |
| Keywords: | FDI, import substitution, market size, MNEs, product differentiation |
| JEL: | F21 F23 L22 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1903&r=all |
| By: | Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia |
| Abstract: | We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in typical industry, while it is stable by industry and country of origin. The fall in concentration is driven by the extensive margin: the number of exporting firm has grown, and the number of exported products has fallen more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers. |
| Keywords: | superstar firms, concentration, US imports, firm heterogeneity, international trade |
| JEL: | E23 F12 F14 L11 R12 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1074&r=all |
| By: | Jan-Emmanuel De Neve; Christian Krekel; George Ward |
| Abstract: | Does higher employee wellbeing lead to higher productivity, and, ultimately, to tangible benefits to the bottom line of businesses? We survey the evidence and study this question in a meta-analysis of 339 independent research studies, including the wellbeing of 1,882,131 employees and the performance of 82,248 business units, originating from 230 independent organisations across 49 industries in the Gallup client database. We find a significant, strong positive correlation between employees' satisfaction with their company and employee productivity and customer loyalty, and a strong negative correlation with staff turnover. Ultimately, higher wellbeing at work is positively correlated with more business-unit level profitability. |
| Keywords: | employee satisfaction, engagement, employee productivity, firm performance, wellbeing, meta-analysis |
| JEL: | I31 J24 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1605&r=all |
| By: | Mirko Abbritti (University of Navarra); Asier Aguilera-Bravo (Public University of Navarra and INARBE); TommasoTrani (University of Navarra) |
| Abstract: | A growing empirical literature documents the importance of long-term relationships and bargaining for price rigidity and firms' dynamics. This paper introduces long-term business-to-business (B2B) relationships and price bargaining into a standard monetary DSGE model. The model is based on two assumptions: first, both wholesale and retail producers need to spend resources to form new business relationships. Second, once a B2B relationship is formed, the price is set in a bilateral bargaining between firms. The model provides a rigorous framework to study the effect of long-term business relationships and bargaining on monetary policy and business cycle dynamics. It shows that, for a standard calibration of the product market, these relationships reduce both the allocative role of intermediate prices and the real effects of monetary policy shocks. We also find that the model does a good job in replicating the second moments and cross-correlations of the data, and that it improves over the benchmark New Keynesian model in explaining some of them. |
| Keywords: | Monetary Policy, PriceBargaining, ProductMarketSearch, B2B |
| JEL: | E52 E3 D4 L11 |
| Date: | 2019–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:una:unccee:wp0119&r=all |
| By: | C.J. Krizan |
| Abstract: | This paper attempts to quantify the difference in performance, of “treated” (program participant) and “non-treated” (non-participant) firms in SBA’s Scale-Up initiative. I combine data from the SBA with administrative data housed at Census using a combination of numeric and name and address matching techniques. My results show that after controlling for available observable characteristics, a positive correlation exists between participation in the Scale-Up initiative and firm growth. However, publicly available survey results have shown that entrepreneurs have a variety of goals in-mind when they start their businesses. Two prominent, and potentially contradictory ones are work-life balance and greater income. That means that not all firms may want to grow and I am unable to completely control for owner motivations. Finally, I do not find a statistically significant relationship between participation in Scale-Up and firm survival once other business characteristics are accounted for. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:19-11&r=all |
| By: | Marco Grazzi (DISCE, Università Cattolica); Chiara Piccardo (Dipartimento di Scienze Economiche, Università di Verona); Cecilia Vergari (Dipartimento di Scienze Economiche, Università di Bologna) |
| Abstract: | This work investigates the relationship between proxies of innovation activities, such as patents and trademarks, and firm performance in terms of revenues and growth. By resorting to the virtual universe of Italian manufacturing firms we provide a rather complete picture of the innovation activities of Italian firms, in terms of patents and trademarks, and we study whether the two instruments for protecting Intellectual Property (IP) exhibit complementarity or substitutability. In addition, and to our knowledge novel, we propose a measure of concordance (or proximity) between the patents and trademarks owned by the same firm and we then investigate whether such concordance appears to exert any effect on performance. |
| Keywords: | Trademarks, Patents, Innovation, Intellectual Property, Complementarity, Concordance, Technological proximity, Firm performance, Firm growth |
| JEL: | O31 O34 L25 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie5:dipe0003&r=all |
| By: | Gupta, Bishnupriya (University of Warwick); Mookherjee, Dilip (Boston University); Munshi, Kaivan (University of Cambridge); Sanclemente, Mario (University of Warwick) |
| Abstract: | We argue that community networks played an important role in the emergence of Indian entrepreneurship in the early stages of the cotton textile and jute textile industries in the late 19th and early 20th century respectively, overcoming the lack of market institutions and government support. From business registers, we construct a yearly panel dataset of entrepreneurs in these two industries. We find no evidence that entry is affected by prior trading experience or price shocks in the corresponding upstream sector. Firm directors exhibited a high degree of clustering of entrepreneurs by community. The dynamics of entry is consistent with a model of network-based dynamics. |
| Keywords: | JEL Classification: |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:402&r=all |
| By: | Nagy, Balázs; Tasnádi, Attila |
| Abstract: | The government may regulate a market by obtaining partial ownership in a firm. This type of socially concerned firm behaves as a combined profit and social surplus maximizer. We investigate the presence of a socially concerned firm in the framework of a Bertrand-Edgeworth duopoly with capacity constraints. In particular, we determine the mixed-strategy equilibrium of this game and relate it to both the standard and the mixed versions of the Bertrand-Edgeworth game. In contrast to other results in the literature we find that full privatization is the socially best outcome, that is the optimal level of public ownership is equal to zero. |
| Keywords: | Bertrand-Edgeworth, mixed duopoly, semi-public firm, mixedstrategy equilibrium |
| JEL: | D43 L13 |
| Date: | 2019–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2019/03&r=all |
| By: | Juan Carluccio; Clément Mazet-Sonilhac; Jean-Stéphane Mésonnier |
| Abstract: | We exploit a new dataset of consolidated balance sheets for some 1,850, mostly nonlisted, French corporate groups, in order to investigate the relationship between corporate investment and the cost of capital. Our empirical model is motivated by a standard Q-theory of investment and relates the rate of investment to a proxy for profits, the cost of capital and firm- and sector-level controls. We notably construct firm-level measures of the weighted average cost of capital (WACC) that account for industry-specific values of the cost of equity and reflect the actual capital structure of firms. We find a confirmation that a high WACC drags down investment: a one SD increase in the real WACC (+2 pp) is associated on average with a reduction by 0.65 pp in the investment rate. The effect is somewhat larger for manufacturing firms and when firms are highly leveraged or more dependent on external finance. We also investigate the impact of lower competition or higher uncertainty on business investment and do not find evidence in support of any role of these two factors in France in recent years. |
| Keywords: | Business Investment, Cost of Capital, Uncertainty, Competition |
| JEL: | G31 G32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:710&r=all |
| By: | Antonella Nocco (Università del Salento); Gianmarco I.P. Ottaviano (Bocconi University); Matteo Salto (European Commission) |
| Abstract: | How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a model of monopolistic competition in which variable markups increasing in firm size are a key source of misallocation across firms and countries. We use 'disadvantaged' to refer to countries with smaller market size, worse state of technology (in terms of higher innovation and production costs), and worse geography (in terms of more remoteness from other countries). We show that, in a global welfare perspective, optimal multilateral trade policy should: promote the sales of low cost firms to all countries, but especially to disadvantaged ones; trim the sales of high cost firms to all countries, but especially to disadvantaged ones; reduce firm entry in all countries, but especially in disadvantaged ones. This would not only restore efficiency but also reduce welfare inequality between advantaged and disadvantaged countries if their differences in market size, state of technology and geography are large enough. |
| Keywords: | International trade policy, monopolistic competition, firm heterogeneity, pricing to market, multilateralism. |
| JEL: | D4 D6 F1 L0 L1 |
| Date: | 2019–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:446&r=all |
| By: | Lina Cortés; Juan M. Lozada; Javier Perote |
| JEL: | C14 L11 L25 |
| Date: | 2019–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:017205&r=all |
| By: | Ana Margarida Fernandes; Peter J. Klenow; Sergii Meleshchuk; Martha Denisse Pierola; Andrés Rodríguez-Clare |
| Abstract: | Is the variation in bilateral trade flows across countries primarily due to differences in the number of exporting firms (the extensive margin) or in the average size of an exporter (the intensive margin)? And how does this affect the estimation and quantitative implications of the Melitz (2003) trade model? The benchmark Melitz model with Pareto-distributed firm productivity and fixed costs of exporting, predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We subject this theoretical prediction to a reality check drawing upon the World Banks Exporter Dynamics Database (EDD) which has firm-level exports from 50 developing countries to all destinations. We find that around 50 percent of the variation in exports across trading partners is along the intensive margin, contradicting the benchmark Melitz-Pareto model. We find that moving from a Pareto to a lognormal distribution of firm productivity allows the Melitz model to successfully match the role of the intensive margin evident in the EDD. We then study the implications of our findings for quantitative trade theory. Using likelihood methods and the EDD, we estimate a generalized Melitz model with a joint lognormal distribution for firm productivity, fixed costs and demand shifters, and use exact hat algebra to quantify the counterfactual effects of a decline in trade costs on trade flows and welfare in the estimated model. Finally, we compare these effects to those that would be predicted by the Melitz-Pareto model, with the Pareto shape parameter chosen to match the average trade elasticity implied by our estimated Melitz-lognormal model. We find that the effects on welfare turn out to be quite close to those in the standard Melitz-Pareto model even though the effects on trade flows remain different. |
| Keywords: | intensive margin of trade, extensive margin of trade, productivity distribution, trade costs, welfare, Pareto |
| JEL: | F10 F12 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7540&r=all |