New Economics Papers
on Efficiency and Productivity
Issue of 2008‒06‒13
seven papers chosen by

  1. Productivity and Efficiency of US Gas Transmission Companies: A European Regulatory Perspective By Jamasb, T.; Pollitt, M.G.; Triebs, T.
  2. The devil is in the shadow Do institutions affect income and productivity or only official income and official productivity? By Dreher, A.; Méon, P.; Schneider, F.
  3. International R&D Spillovers and Institutions By David T. Coe; Elhanan Helpman; Alexander W. Hoffmaister
  4. Privatising national oil companies: Assessing the impact on firm performance By Wolf, C.; Pollitt, M.G.
  5. Further results on bias in dynamic unbalanced panel data models with an application to firm R&D investment By Lokshin, Boris
  6. Distance to Frontier and Appropriate Business Strategy By Alex Coad
  7. Estimating the Productivity Selection and Technology Spillover Effects of Imports By Ram C. Acharya; Wolfgang Keller

  1. By: Jamasb, T.; Pollitt, M.G.; Triebs, T.
    Abstract: On both sides of the Atlantic the regulation of gas transmission networks has undergone major changes since the early 1990’s. Whereas in the US the long-standing regime of cost-plus regulation was complemented by increasing pipe-to-pipe competition, most European countries moved towards incentive regulation complemented by market integration. We study the impact of US regulatory reform using a Malmquist-based productivity analysis for a panel of US interstate companies. Results are presented for changes in productivity, as well as for several convergence tests. The results indicate that taking productivity and convergence as performance indicators, regulation has been rather successful, in particular during a period where overall demand was flat. Lessons for European regulators are twofold. First, the US analysis shows that benchmarking of European transmission operators would be possible if data were available. Second, our results suggest that, in the long-run, market integration and competition are alternatives to the current European model.
    Keywords: Natural gas transmission; utility regulation; data envelopment analysis; total factor productivity; convergence
    JEL: L51 L95 O57 D24
    Date: 2008–03
  2. By: Dreher, A.; Méon, P.; Schneider, F.
    Abstract: This paper assesses the relationship between institutions, output, and productivity, when official output is corrected for the size of the shadow economy. Our results confirm the usual positive impact of institutional quality on official output and total factor productivity, and its negative impact on the size of the underground economy. However, once output is corrected for the shadow economy, the relationship between institutions and output becomes weaker. The impact of institutions on total (“corrected”) factor productivity even becomes insignificant. Differences in corrected output must then be attributed to differences in factor endowments. These results survive several tests for robustness.
    Keywords: Shadow economy, income, aggregate productivity, development accounting.
    JEL: O11 O17 O47 O5
    Date: 2007–11
  3. By: David T. Coe; Elhanan Helpman; Alexander W. Hoffmaister
    Abstract: The empirical analysis in "International R&D Spillovers" (Coe and Helpman, 1995) is first revisited by applying modern panel cointegration estimation techniques to an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables, such as legal origin and patent protection, in order to allow for parameter heterogeneity based on a country’s institutional characteristics. The results suggest that institutional differences are important determinants of total factor productivity and that they impact the degree of R&D spillovers.
    JEL: O31 O40 O43
    Date: 2008–06
  4. By: Wolf, C.; Pollitt, M.G.
    Abstract: This study empirically investigates the impact of privatisation on firm performance in the global oil and gas industry, where questions of resource control have regained widespread attention. Using a dataset of 60 public share offerings by 28 National Oil Companies it is shown that privatisation is associated with comprehensive and sustained improvements in performance and efficiency. Over the seven-year period around the initial privatisation offering, return on sales increases by 3.6 percentage points, total output by 40%, capital expenditure by 47%, and employment intensity drops by 35%. Many of our observed performance improvements are already realised in anticipation of the initial privatisation date, accrue over time, and level off after the initial ownership change rather than accelerate. Details of residual government ownership, control transfer, and size and timing of follow-on offerings provide limited incremental explanatory power for firm performance, except for employment intensity. Based on these results partial privatisations in the oil sector might be seen to capture a significant part of the performance improvement associated with private capital markets without the selling government having to cede majority control.
    Keywords: Privatisation, ownership, corporate performance, anticipation, oil and gas industry
    JEL: C23 G32 L33 L71 M20 Q40
    Date: 2008–02
  5. By: Lokshin, Boris (UNU-MERIT, and Maastricht University)
    Abstract: This paper extends the LSDV bias-corrected estimator in [Bun, M., Carree, M.A. 2005. Bias-corrected estimation in dynamic panel data models, Journal of Business and Economic Statistics, 23(2): 200-10] to unbalanced panels and discusses the analytic method of obtaining the solution. Using a Monte Carlo approach the paper compares the performance of this estimator with three other available techniques for dynamic panel data models. Simulation reveals that LSDV-bc estimator is a good choice except for samples with small T, where it may be unpractical. The methodology is applied to examine the impact of internal and external R&D on labor productivity in an unbalanced panel of innovating firms.
    Keywords: Bias Correction, Unbalanced Panel Data, GMM, Dynamic Models
    JEL: C23
    Date: 2008
  6. By: Alex Coad
    Abstract: This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firms distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin's q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market.
    Keywords: Distance to frontier, Strategy, Market value, Innovation, Firm Growth
    JEL: L25 L21 D21 O31
    Date: 2008–06–03
  7. By: Ram C. Acharya; Wolfgang Keller
    Abstract: In the wake of falling trade costs, two central consequences in the importing economy are, first, that stronger competition through increased imports can lead to market share reallocations among domestic firms with different productivity levels (selection). Second, the increase in imports might improve domestic technologies through learning externalities (spillovers). Each of these channels may have a major impact on aggregate productivity. This paper presents comparative evidence from a sample of OECD countries. We find that the average long run effect of an increase in imports on domestic productivity is close to zero. If the scope for technological learning is limited, the selection effect dominates and imports lead to lower productivity. If, however, imports are relatively technology-intensive, imports also generate learning that can on net raise domestic productivity. Moreover, there is somewhat less selection when the typical domestic firm is large. The results support models in which trade triggers both substantial selection and technological learning.
    JEL: F1 F2 O3 O33
    Date: 2008–06

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