nep-bec New Economics Papers
on Business Economics
Issue of 2022‒05‒23
twelve papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Multi-Product Firms in International Economics By Michael Irlacher
  2. Entry, exit and market structure in a changing climate By Cascarano, Michele; Natoli, Filippo; Petrella, Andrea
  3. Conflicts of interest, ethical standards, and competition in legal services By BOUCKAERT, Jan; STENNEK, Johan
  4. JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality By Luca Coraggio; Marco Pagano; Annalisa Scognamiglio; Joacim Tåg
  5. The Economy of Collaboration between Reciprocity and Profit By Leogrande, Angelo
  6. Industries, Mega Firms, and Increasing Inequality By John C. Haltiwanger; Henry R. Hyatt; James Spletzer
  7. Performance feedback and export intensity of Chinese private firms: Moderating roles of institution-related factors By Meitong Dong; Liwen Wang; Defeng Yang; Kevin Zhou
  8. Under-Reporting of Firm Size Around Size-Dependent Regulation Thresholds: Evidence from France By Philippe Askenazy; Thomas Breda; Vladimir Pecheu
  9. Nobody's gonna slow me down? The effects of a transportation cost shock on firm performance and behavior By Branco, Catarina; Dohse, Dirk; dos Santos, João Pereira; Tavares, José
  10. Spread Too Thin: The Impact of Lean Inventories By Julio L. Ortiz
  11. Impacts of Increased Chinese Imports on Japan’s Labor Market: Firm and Regional Aspects By HAYAKAWA Kazunobu; ITO Tadashi; URATA Shujiro
  12. Personalized Pricing and Competition By Rhodes, Andrew; Zhou, Jidong

  1. By: Michael Irlacher
    Abstract: A striking pattern in transaction-level data is the concentration of international shipments in the hands of a few large firms. One common feature of dominating high-performance firms is that they produce multiple products and ship them to many destinations. Motivated by the emergence of highly detailed data at the firm-product-destination level, a series of theoretical and empirical papers studies the role of multi-product firms (MPFs) in international trade. This survey reviews the evidence on the importance of MPFs in international markets and highlights the key theoretical as well as empirical results that the literature has produced in the last decade.
    Keywords: survey, multi-product firms, international economics, theory, empirics
    JEL: F10 F12 F14
    Date: 2022
  2. By: Cascarano, Michele; Natoli, Filippo; Petrella, Andrea
    Abstract: Climate change has long run effects on the size and composition of a country's corporate sector. Using administrative data on the universe of Italian firms, we find that an increase in the incidence of very hot days over a multiyear period persistently reduces the growth rate of active firms in the market. This is due to a drop in firm entry and an increase in firm exit, with relocation playing a minor role. A firm-level investigation reveals a dichotomy between smaller firms, which suffer from high temperatures, and larger firms that successfully adapt, increasing production and net revenues. According to an average climatic scenario, the projected evolution of local temperatures will impact corporate demography further, also exacerbating the divergent effects across warmer and colder areas over the current decade.
    Keywords: climate change; temperatures; firm dynamics
    JEL: D22 Q54 R12
    Date: 2022–04–26
  3. By: BOUCKAERT, Jan; STENNEK, Johan
    Abstract: We study how the legal profession manages representational conflicts of interest. Such conflicts arise when the same law firm represents clients with adverse interests. They may compromise the legal process, ultimately jeopardizing social welfare. We argue that current ethical standards, emphasizing disqualification over Chinese walls, may actually worsen the clients’ situation. Instead, the clients’ interests are today mainly protected by law firms being small. Despite low market concentration, law firms enjoy high earnings as representational conflicts create negative network externalities at the firm level. These profits are not eroded even in the long run as entry occurs through firm splitups.
    Keywords: Law firms, Professional services, Dual representation, Representational conflicts of interest, Ethical standards, Chinese walls, Recusals, Negative network externalities, Competition, Self-regulation
    JEL: K40 L13 L22 L44 L84
    Date: 2022–04
  4. By: Luca Coraggio (University of Naples Federico II); Marco Pagano (University of Naples Federico II and EIEF); Annalisa Scognamiglio (University of Naples Federico II); Joacim Tåg (Research Institute of Industrial Economics (IFN))
    Abstract: Does the matching between workers and jobs help explain productivity differentials across firms? To address this question we develop a job-worker allocation quality measure (JAQ) by combining employer-employee administrative data with machine learning techniques. The proposed measure is positively and significantly associated with labor earnings over workers’ careers. At firm level, it features a robust positive correlation with firm productivity, and with managerial turnover leading to an improvement in the quality and experience of management. JAQ can be constructed for any employer-employee data including workers’ occupations, and used to explore the effect of corporate restructuring on workers’ allocation and careers.
    Date: 2022
  5. By: Leogrande, Angelo
    Abstract: The book entitled “L’Economia della Collaborazione. Le Nuove Piattaforme Digitali della Produzione e del Consumo” was written by Francesco Ramella and Cecilia Manzo in 2019 and published in Bologna for il Mulino. The book has 245 pages and a cover price of 22.00 euros. The book consists of an introduction, 8 chapters and conclusions.
    Keywords: Business Objectives of the Firm, Firm Organization and Market Structure, Organization of Production, Contracting Out • Joint Ventures • Technology Licensing, Firm Performance: Size, Diversification, and Scope, Entrepreneurship
    JEL: L20 L21 L22 L23 L24 L25 L26
    Date: 2022–04–24
  6. By: John C. Haltiwanger; Henry R. Hyatt; James Spletzer
    Abstract: Most of the rise in overall earnings inequality is accounted for by rising between-industry dispersion from about ten percent of 4-digit NAICS industries. These thirty industries are in the tails of the earnings distribution, and are clustered especially in high-paying high-tech and low-paying retail sectors. The remaining ninety percent of industries contribute little to between-industry earnings inequality. The rise of employment in mega firms is concentrated in the thirty industries that dominate rising earnings inequality. Among these industries, earnings differentials for the mega firms relative to small firms decline in the low-paying industries but increase in the high-paying industries. We also find that increased sorting and segregation of workers across firms mainly occurs between industries rather than within industries.
    JEL: J21 J31
    Date: 2022–04
  7. By: Meitong Dong (HKU - The University of Hong Kong); Liwen Wang (Audencia Business School, Shenzhen Univerisity [Shenzhen]); Defeng Yang (Jinan University [Guangzhou]); Kevin Zhou (HKU - The University of Hong Kong)
    Abstract: Building on the behavioral theory of the firm and institutional view, we examine how performance feedback (i.e., a focal firm's performance relative to its industry peers) affects export intensity and how institution-related factors moderate this relationship. Using a sample of Chinese private manufacturing firms, we find that positive performance feedback lowers export intensity while the relationship between negative performance feedback and export intensity is insignificant. Moreover, outperforming firms are likely to decrease their export intensity even more when they are located in regions of better institutional development or have political connections. Underperforming firms with political connections tend to increase their export intensity. These findings enrich our understanding of the export behavior of emerging market firms.
    Keywords: performance feedback,export intensity,institutional development,political connections,behavioral theory of the firm,institutional view
    Date: 2022
  8. By: Philippe Askenazy (Centre Maurice Halbwachs, Centre National de la Recherche Scientifique (CNRS) and ENS); Thomas Breda (Paris School of Economics, CNRS); Vladimir Pecheu (Aix Marseille Univ, CNRS, AMSE, Marseille, France)
    Abstract: The existence of a peak at 49 employees in the firm size distribution in France, followed by a permanent decrease in the number of firms has been the starting point of political discourses and academic studies on the cost of size-dependent regulations at 50-employee. These features of the distribution are visible when firm size is declared by employers in fiscal data but not when it is reconstructed from individual-level social security data. This working paper explores these differences both from statistical and institutional viewpoints. It provides evidence showing that a large proportion of employers manipulate the firm size they declare in their fiscal documents. This manipulation generates the particular shape of the size distribution in the fiscal data. We discuss the rationale for such behavior: the key point is that the under-declaration in fiscal data is not subject to substantial sanctions and it can allow firms not to comply with the labor law. Event studies and comparisons of firms below and above the 50-employee threshold suggest that this threshold may only have limited effects on firm performance or growth potential. Consequently the welfare costs of the regulations at 50-employee might be smaller than what was found by some of the studies that assume a perfect compliance with the law.
    Keywords: regulations, firm size, firm dynamics, economic cost, non-compliance
    JEL: L11 L51 J8
    Date: 2022–04
  9. By: Branco, Catarina; Dohse, Dirk; dos Santos, João Pereira; Tavares, José
    Abstract: This paper takes a deep and comprehensive look into the firm-level behavioral reactions to a massive transportation cost shock. Exploiting rich data encompassing the universe of Portuguese private firms and a natural experiment we find that the introduction of tolls on previously toll-free highways caused a substantial decrease of turnover and firm profits. In response to the tolls, firms reduced expenses, cutting employment-related expenses and purchases of other inputs in a similar magnitude. Labor costs were reduced by employment cuts rather than by wage cuts. We find evidence for increased firm exit in treated municipalities, but not for increased re-location.
    Keywords: road tolls,infrastructure,firm performance,firm behavior,location,Portugal
    JEL: R48 L25 R12
    Date: 2022
  10. By: Julio L. Ortiz
    Abstract: Widespread adoption of just-in-time (JIT) production has reduced inventory holdings. This paper finds that JIT creates a trade-off between firm profitability and vulnerability to large shocks. Empirically, JIT adopters experience higher sales and less volatility while also exhibiting heightened cyclicality and sensitivity to natural disasters. I explain these facts in a structurally estimated general equilibrium model where firms can adopt JIT. Relative to a no-JIT economy, the estimated model implies a 1.3% increase in firm value. At the same time, an unanticipated shock results in a roughly 15% deeper output contraction. This occurs because firms "stock out" or hoard materials.
    Keywords: Inventory investment; Firm dynamics; Just-in-time production
    JEL: D25 E22 G30
    Date: 2022–04–20
  11. By: HAYAKAWA Kazunobu; ITO Tadashi; URATA Shujiro
    Abstract: Using firm/plant-level data from the Census of Manufacture, this study investigates the impact of Chinese import competition, focusing on different effects based on firm characteristics and regional factors. We find that import competition from China harms Japanese firms’ survival ratios, with the negative impacts being especially strong for smaller firms. Subcontractors are also more vulnerable to Chinese import competition. However, subcontractors in metropolitan areas experience lesser negative impact. In terms of the effects on firm employment, import competition from China had a negative impact, but no statistically significant difference exists based on firm size or whether firms are subcontractors. Firms with overseas affiliates in China or multiple domestic plants reduced their employment in Japan. Moreover, plants in Tokyo, Aichi, and Osaka areas have been particularly inflicted an adverse effect.
    Date: 2022–04
  12. By: Rhodes, Andrew; Zhou, Jidong
    Abstract: We study personalized pricing (or first-degree price discrimination) in a general oligopoly model. In the short-run, when the market structure is fixed, the impact of personalized pricing hinges on the degree of market coverage (i.e., how many consumers buy). If coverage is high (e.g., because the production cost is low, or the number of firms is large), personalized pricing intensifies competition and so harms firms but benefits consumers, whereas the opposite is true if coverage is low. However in the long-run, when the market structure is endogenous, personalized pricing always benefits consumers because it induces the socially optimal level of firm entry. We also study the asymmetric case where some firms can use consumer data to price discriminate while others cannot, and show it can be worse for consumers than when either all or no firms can personalize prices.
    JEL: D43 D82 L13
    Date: 2022–05–09

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