New Economics Papers
on Efficiency and Productivity
Issue of 2007‒09‒30
seven papers chosen by

  1. Antidumping Protection and Productivity of Domestic Firms : A firm level analysis By Josef, KONINGS; Hylke, VANDENBUSSCHE
  2. Measuring efficiency in health care: an application to out of hours primary care services in the island of Ireland By Grace Lordan
  3. Structure and performance of the services sector in transition economies By Fernandes, Ana M.
  4. Single- versus Multi-Channel Distribution Strategies in the German Life Insurance Market: A Cost and Profit Efficiency Analysis By Lucinda Trigo Gamarra
  5. Research, Knowledge Spillovers and Innovation By Piergiuseppe Morone; Carmelo Petraglia; Giuseppina Testa
  6. Reference Models and Incentive Regulation of Electricity Distribution Networks: An Evaluation of Sweden’s Network Performance Assessment Model (NPAM) By Jamasb, T.; Pollitt, M.
  7. Are Public Banks pro-Competitive? Evidence from Concentrated Local Markets in Brazil By Christiano A. Coelho; João Manoel Pinho de Mello; Leonardo Rezende

  1. By: Josef, KONINGS (KULeuven Department of Economics); Hylke, VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: We analyze the relationship between Antidumping (AD) Protection and the productivity of EU domestic firms in import-competing industries. For this purpose we identify a panel of domestic firms between 1993 and 2003 that a some point during this period are affected by AD initiations. Using a difference-in-difference approach, we find that AD measures result in improvements of measured productivity for domestic firms. Total Factor Productivity (TFP) of protected firms increases by 2% in the short-run and by 5% to 13% in the long-run. However, there is substantial heterogeneity across firms. The effect of protection depends on the initial Òdistance-to-the-frontier firmÓ in the industry. While protection raises TFP of ÒlaggardÓ domestic firms, it lowers TFP for ÒefficientÓ firms that operate close to the efficiency frontier. These results are consistent with recent theoretical work supporting the view that trade policy, under certain conditions, can induce technological catching-up. While this paper evaluates the effectiveness of AD policy it does not engage in a welfare analysis.
    Date: 2007–09–17
  2. By: Grace Lordan
    Abstract: This paper is a cross border study that explores isolating the efficiency component and measuring its overall contribution to productivity in the case of out of hours (OOH) primary care services operating on the Island of Ireland. Out of hours GP care is supplied throughout the Island of Ireland by OOH co-operatives. Although Northern Ireland (NI) and the Republic of Ireland (ROI) have their own individual health systems the OOH organisations themselves are relatively homogenous in structure. The data for this study has been gathered and collated by the author and relates to six of twelve co-operatives operating in ROI and five of the seven co-operatives in NI. The primary aim of this paper is to estimate efficiency for these organisations using stochastic frontier analysis (SFA) SFA was chosen as the method for analysis as it allows distinction between ‘noise’ effects and efficiency effects. This paper outlines the means that SFA methodology can be used to derive sensible and robust efficiency estimates for OOH primary care organizations operating on the Island of Ireland. The paper also examines the sensitivity of these estimates to the choice of functional form for the health production function, the choice of error distribution for the efficiency terms and the means in which heterogeneity is incorporated into the analysis. Individual efficiency estimates, rankings, cross border rankings and comparisons are reported to allow recommendations to be made on how these organizations can improve their production process.
    Keywords: Primary Care, Out of Hours, Efficiency, Stochastic Production Frontiers.
    Date: 2007–06
  3. By: Fernandes, Ana M.
    Abstract: This paper examines the structure and performance of the services sector in Eastern European and Central Asian countries during 1997-2004. Services represent an increasing share of total value added and employment with the major sub-sectors being wholesale trade, retail trade, inland transport, telecommunications, and real estate activities. A clear divide separates EU-5 countries from South Eastern European countries and Ukraine in terms of services labor productivity. Although a large gap in productivity also separates EU-8 countries from EU-15 countries, that gap was reduced from 1997 to 2004 as most services sub-sectors experienced fast productivity growth. High skill intensive sub-sectors and information and communications technology producers and users have exhibited higher productivity levels and growth rates relative to other sub-sectors since 2000. The author finds a positive effect of services liberalization on the productivity growth of services sub-sectors. The author also finds a positive and significant effect of services liberalization in both finance and infrastructure on the productivity of downstream manufacturing.
    Keywords: Labor Policies,E-Business,Labor Markets,Economic Theory & Research,Transport Economics Policy & Planning
    Date: 2007–09–01
  4. By: Lucinda Trigo Gamarra (University of Rostock)
    Abstract: Until its liberalisation in 1994 exclusive agents dominated the distribution of products in the German life insurance industry. Since then, their importance has been declining for the benefit of both distribution via direct distribution channel and independent agents. However, the market shares of specialized direct and independent agent insurers have remained small, while multi-channel insurers increasingly incorporate direct and independent distribution channels, and represent the dominant distribution strategy. The aim of this paper is twofold: First, it analyses the performance of single and multi-channel distribution firms in the German life insurance. Thus, we are able to explain the development and the coexistence of the industries' distribution systems. Our study contributes to research on coexistence of different distribution systems in insurance industry which had been limited to the comparison of exclusive versus independent agent insurers so far. Second, our paper gives insight into cost and profit efficiency levels of German life insurance firms for the period 1997-2005, and delivers information about scale economies in the German life insurance industry. Applying an empirical framework developed by Berger et al. (1997) we estimate cost and profit efficiency for three groups of life insurance firms differing in their distribution systems: multichannel insurers, direct insurers, and independent agent insurers. Non-parametric DEA is used to estimate efficiencies for a sample of German life insurers for the years 1997-2005. Testing a set of hypothesis, we find economic evidence for the coexistence of the different distribution systems which is the absence of comparative performance advantages of specialised insurers. Further, we find evidence for scale economies in the German life insurance industry.
    Keywords: Insurance markets, distribution systems, efficiency analysis
    JEL: G22 L15 L22
    Date: 2007
  5. By: Piergiuseppe Morone; Carmelo Petraglia; Giuseppina Testa (School of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: In order to assess the relationship between internal and external innovative inputs and innovative output at firm level, a knowledge production function is estimated for a representative sample of Italian manufacturing firms over the period 1998-2003. To account for endogeneity of R&D effort in the knowledge production function, we estimate a Heckman selection model on R&D decisions. Results support the view that R&D intensity is positively linked to firm size, age and human capital endowment as well as to higher exposure to international competitive pressure. Then, the knowledge production function is estimated using a standard probit, where the probability to innovate of each firm depends upon intramural R&D effort, regional and industrial spillovers and on a vector of interaction and control variables. Our measures of external knowledge, which circulates and potentially transfers across firms belonging to the same geographical or industrial spaces, are based on predicted values for R&D effort in the region and industry respectively. Our results suggest a positive relationship between sectoral spillovers and innovation; knowledge diffusion in the regional space positively impacts on the probability to innovate of the recipient firm only if the latter has an appropriate endowment of human capital.
    Keywords: Innovation, knowledge, spillovers
    JEL: O3 L6 C25
    Date: 2007–09
  6. By: Jamasb, T.; Pollitt, M.
    Abstract: The world-wide electricity sector reforms have led to a search for alternative and innovative approaches to regulation to promote efficiency improvement in the natural monopoly electricity networks. A number of countries have used incentive regulation models based on efficiency benchmarking of the electricity network utilities. While most regulators have opted adopted parametric and non-parametric frontier-based methods of benchmarking some have used engineering designed ‘reference firm’ or ‘norm’ models for the purpose. This paper examines the incentive properties and other related aspects of the norm model NPAM used in regulation of distribution networks in Sweden and compares these with those of frontier-based benchmarking methods. We identify a number of important differences between the two approaches to regulation benchmarking that are not readily apparent and discuss their ramifications for the regulatory objectives and process.
    Keywords: Electricity, regulation, benchmarking.
    JEL: L51 L94 L97
    Date: 2007–09
  7. By: Christiano A. Coelho (Central Bank of Brasil); João Manoel Pinho de Mello (Department of Economics, PUC-Rio); Leonardo Rezende (Department of Economics, PUC-Rio)
    Abstract: We measure the competitive effect of public ownership of banks in concentrated local banking markets in Brazil by extending Bresnahan and Reiss’s [1991] framework to measure the effects of entry in concentrated markets. We use variation in market size, the number of competitors and their identity to infer how conduct is affected by the entry of a private vis-à-vis a public bank. We find that, while local markets whose structure is private bank duopoly are 100% larger than private monopolies, duopolies with one public and one private bank and private monopolies are no different with respect to market size. These results suggest that, while the presence of private banks toughens competition, public banks do not affect conduct.
    Keywords: banking industry; public versus private ownership; effect of entry.
    JEL: L10 L13 L33
    Date: 2007–08

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