Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

Decomposing seasonality in an urban destination: the case of Milan

ABSTRACT

This paper analyses demand fluctuations in the field of urban destinations, decomposing Milan’s hotel seasonality. Four different seasonal periods are identified and two research questions are explored. The first aims to verify how seasonality evolved over the period 2004–2015 and the effectiveness of analysing tourism flow in an urban destination using daily data. The second aim explores the effects generated by the Milan Expo 2015 on seasonality. Using Smith Travel Research data, a longitudinal analysis (2004–2015) is carried out, decomposing the annual Theil index. Evidence is reported and discussed.     

Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

In the first part of the paper, we try to clearly identify financial innovations and draw a general framework. Despite the relevance of financial innovations, a unique definition is difficult to find. We then provide empirical evidence of such innovations on a sample of Italian and UK listed banks over the period 2005–2007 using financial account data. First, the absence of any mention of a specific organizational unit in charge of research and development (R&D) is highlighted. However, the existence of a research and developmental function involving different organizational units cannot be excluded. Second, innovation seems to be mainly concentrated in the product area, both in Italy and in the UK. This could be accounted for by the difference in the “life cycles” of innovations and by the different operational conditions of banks in both systems. Third, larger banks seem more innovative, both in Italy and in the UK. No clear relation between innovation and cost reduction/revenue increase seems to exist, at least in Italy. In the light of the above considerations, policy implication comes to light on whether the choice of not establishing a specific organizational unit dedicated to R&D could turn out effective in the medium-long term.

Vertical Integration and Costly Demand Information in Regulated Network Industries

We study how vertical integration affects the acquisition and transmission of demand information in regulated network industries. Demand information helps to set the access price, incentivize infrastructure investment, and foster competition in the unregulated downstream market. We show that when demand information is costly and private, the optimal access prices are independent of demand levels. Vertical integration then secures greater welfare in new markets where little demand information is available or where infrastructure cost is low, or when investing is highly risky. In the remaining cases, vertical separation is preferable.     

A Socio‐Technical Perspective To The Right To The City: Regularizing Electricity Access in Rio de Janeiro's Favelas

This article takes the contemporary transformation in electricity access in Rio de Janeiro's favelas as a starting point for a broader review of the relationship between the right to the city in informal settlements and the neoliberalization of the electricity service (introduction of full cost recovery and ‘the user pays' principle). It examines the socio‐technical process through which contractual customer relationships have been established or restored through regularization of the electricity service in two favelas, namely, the installation of meters and networks. I suggest that applying a science and technology study perspective to the right to the city helps explore both the materiality and the spatial dimension of power and politics and, in so doing, provides an insight into some of the forms of mediation that help reshape recognition, urban practices and the favela dwellers' position within such an essential service. Our analysis shows how the means of recognizing these city dwellers ‘by the network' are materially and symbolically reshaped by commercial processes. The question then is whether this right to the city, which is being reshaped by commercial processes, will be the source of new inequalities or new politicizations.     

Savings and investments in the OECD: a panel cointegration study with a new bootstrap test

In this paper we test for the existence of a stable long-run savings–investments relationship in 18 OECD economies over the period 1970–2007. Although individual modelling provides only very weak support to the hypothesis of a link between savings and investments, this cannot be ruled out as individual time series tests may have low power. We thus construct a new bootstrap test for panel cointegration robust to short- and long-run dependence across units. This test provides evidence of a long-run savings–investments relationship in most of the countries, with USA the most notable exception. However, the elasticities generally smaller than 1 suggest that market imperfections mostly cause only partial home biases.     

Organic‐ and Animal Welfare‐labelled Eggs: Competing for the Same Consumers?

To understand the market for sustainable foods, it is important to allow for heterogeneous preferences. However, most studies of consumer preferences for sustainable foods only investigate average consumer preferences. They do not take into account that some consumer segments attempt to purchase as much sustainable food as possible, others are almost indifferent to the notion of sustainable food, and still others consider sustainable food a complete hoax. The aim of this study is to explore the preferences for various types of premium eggs across three consumer segments. We conduct a choice experiment including 900 Norwegian consumers and perform a behavioural segmentation based on the frequency of organic food purchase. We find that the segment purchasing the most organic food is, as expected, willing to pay a significant premium for organic eggs over eggs displaying only enhanced animal welfare. However, most consumers, who only occasionally purchase organic products, are unwilling to pay more for organic eggs than for enhanced animal welfare eggs, suggesting diminishing marginal utility for additional attributes. We find that a third consumer segment attempts to avoid organic eggs, even when they cost the same as other eggs. Our findings suggest that organic products will be unsuccessful in acquiring a larger share of the market as long as most consumers are unwilling to pay a premium for organic products with all their cost increasing sustainable attributes over products that have only a single sustainable attribute, in our case enhanced animal welfare.     

Bookbuilding and Strategic Allocation

In the bookbuilding procedure, an investment banker solicits bids for shares from institutional investors prior to pricing an equity issue. The banker then prices the issue and allocates shares at his discretion to the investors. We examine the books for 39 international equity issues. We find that the investment banker awards more shares to bidders who provide information in their bids. Regular investors receive favorable allocations, especially when the issue is heavily oversubscribed. The investment banker also favors revised bids and domestic investors.     

Technological innovation and multinational expansion: A two-way link?

The paper examines how investment in research influences the form of foreign expansion chosen by the firm, and vice versa. We consider a two-country model where a monopolist producing in one country can choose between export and foreign direct investment. We assume process innovation, where the cost-reducing technological innovations are an outcome of the firm's investment in R&D. The role of technology transfer costs is explored. The model shows that, with low costs of technology transfer, there is a two-way link between the firm's R&D effort and multinational expansion. We also prove that both the research choice and the multinational choice have a positive effect on consumers' welfare in both countries.     

A model of banknote discounts

Prior to 1863, state-chartered banks in the United States issued notes—dollar-denominated promises to pay specie to the bearer on demand. Although these notes circulated at par locally, they usually were quoted at a discount outside the local area. These discounts varied by both the location of the bank and the location where the discount was being quoted. Further, these discounts were asymmetric across locations, meaning that the discounts quoted in location A on the notes of banks in location B generally differed from the discounts quoted in location B on the notes of banks in location A. Also, discounts generally increased when banks suspended payments on their notes. In this paper we construct a random matching model to qualitatively match these facts about banknote discounts. To attempt to account for locational differences, the model has agents that come from two distinct locations. Each location also has bankers that can issue notes. Banknotes are accepted in exchange because banks are required to produce when a banknote is presented for redemption and their past actions are public information. Overall, the model delivers predictions consistent with the behavior of discounts.