New Economics Papers
on Efficiency and Productivity
Issue of 2006‒03‒11
four papers chosen by

  1. Regional Productivity Differentials: Explaining the Gap By Martin Boddy; John Hudson; Anthony Plumridge; Don Webber
  2. Productivity, Profitability and Financial Fragility: Evidence from Italian Business Firms By Giulio Bottazzi; Angelo Secchi; Federico Tamagni
  3. DECENTRALIZATION AND EFFIENCY IN SPANISH LOCAL GOVERMENT By Emili Tortosa Ausina; Diego Prior; María Teresa Balaguer-Coll
  4. Efficiency in Deregulated Electricity Markets: Offer Cost Minimization vs. Payment Cost Minimization Auction By Rimvydas Baltaduonis

  1. By: Martin Boddy; John Hudson; Anthony Plumridge; Don Webber (School of Economics, University of the West of England)
    Abstract: Issues of productivity and competitiveness at a regional level have increasingly been a focus for both academic and policy concern. Significant and persistent differences in productivity are evident both in the UK and across Europe as a whole. This paper uses data relating to individual business units to examine the determinants of regional productivity differentials across British regions. It demonstrates that the substantial differences in regional productivity can be explained by a fairly limited set of variables. These include industry mix, the capital employed by the firm, business ownership and the skills of the local labour force. Also important are location-specific factors including travel-time from London and population density. Taken together, these factors largely explain regional productivity differentials. The analysis extends those studies that have identified but not quantified the role of different ‘productivity drivers’ in a systematic fashion or that have focused on only a limited set of drivers. It has important policy implications particular in relation to the role of travel time and possible effects of density and agglomeration.
    Keywords: Regional competitiveness; Productivity; UK; Regional development; business-data analysis;
    Date: 2005–12
  2. By: Giulio Bottazzi; Angelo Secchi; Federico Tamagni
    Abstract: Exploiting a rich panel reporting balance sheets data from a large sample of Italian firms for the period 1996-2002, we attempt to shed light on two crucial dimensions of firms' structure and dynamics: profitability and productivity performances. We start by exploring the statistical properties of a set of measures of profit margins and profitability, some standard as ROI and others that we built from the data, applying a set of parametric and non parametric techniques to the analysis of both their empirical distributions and their persistence over time. Then, looking for the possible linkages existing between the structural characteristics of the firms and their productivity performance, we study the empirical distributions and the dynamics of productive structures and productivity. We also exploit an additional information present in the data which allows to group firms according to an index of financial rating. Besides checking the robustness of results with respect to this level of disaggregation, we also provide an initial understanding about how the economic performances of a firm affect (or are affected by) its financial conditions and, relatedly, the availability of external credit.
    Keywords: Firm performance, Profitability, Productivity, Financial constraints
    Date: 2006–03–03
  3. By: Emili Tortosa Ausina (Universitat Jaume I); Diego Prior (Universidad Autónoma de Barcelona); María Teresa Balaguer-Coll (Universitat Jaume I)
    Abstract: This study analyzes the links between efficiency and the decentralization of competencies among Spanish local governments for years 1995 and 2000. The aim is pursued by considering a two-stage activity analysis model in which the performance of eachmunicipality is first evaluated against other municipalities with a similar level of competencies and, in a second stage, it is compared with that of other municipalities for which decentralization remains at a more preliminary stage. The model also considers an index aimed at measuring whether tendencies towards higher (or lower) benefits from decentralization might exist over time. Results suggest that some municipalities could manage their resources more efficiently if bestowed on more competencies. Although this sort of decentralization economies do not emerge for all municipalities, their magnitude clearly overshadows the diseconomies found if downscaling of decision making went too far and least decentralized municipalities were conferred on more competencies. In addition, the likely efficiency gains from enhanceddecentralization increase over time. El objetivo de este trabajo es analizar los vínculos entre eficiencia y descentralización de competencias para los ayuntamientos españoles durante los años 1995 y 2000. Para ello, se considera un modelo de análisis de la actividad en dos etapas en el que, en primer lugar, la eficiencia de cada municipio se evalúa frente a la de otros municipios con un mismo nivel de competencias y, en una segunda etapa, se compara con el de aquellos municipios para los cuales la descentralización de competencias permanece en un nivel inferior. El modelo también considera un índice que mide si hay tendencias hacia mayor -o menor- beneficios de la descentralización a lo largo del tiempo. Los resultados indican que algunos municipios podrían gestionar sus recursos más eficientemente de tener un mayor nivel de competencias. Aunqueeste tipo de economías de descentralización no existen para todos los municipios, su magnitud es superior a la magnitud de las deseconomías que se dan para otros municipios. Asimismo, lasganancias de eficiencia obtenidas de una hipotética descentralización aumentan con el tiempo.
    Keywords: Análisis de la actividad, descentralización, eficiencia, gobierno local Activity analysis, decentralization, efficiency, local government
    JEL: D24 D60 H71 H72
    Date: 2006–02
  4. By: Rimvydas Baltaduonis (University of Connecticut)
    Abstract: This study of the wholesale electricity market compares the efficiency performance of the auction mechanism currently in place in U.S. markets with the performance of a proposed mechanism. The analysis highlights the importance of considering strategic behavior when comparing different institutional systems. We find that in concentrated markets, neither auction mechanism can guarantee an efficient allocation. The advantage of the current mechanism increases with increased price competition if market demand is perfectly inelastic. However, if market demand has some responsiveness to price, the superiority of the current auction with respect to efficiency is not that obvious. We present a case where the proposed auction outperforms the current mechanism on efficiency even if all offers re ect true production costs. We also find that a market designer might face a choice problem with a tradeoff between lower electricity cost and production efficiency. Some implications for social welfare are discussed as well.
    Keywords: strategic behavior, multi-unit auction, efficiency, electricity
    JEL: C72 D44 D61 L94
    Date: 2006–03

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