THE ECONOMICS OF NETWORKS: A SURVEY OF THE EMPIRICAL LITERATURE

Abstract.  Network effects, the increase in value of consuming a product if many other consumers use the same product, are a feature of many markets and in particular of many high-technology products. This paper surveys the burgeoning empirical literature that has developed especially during the last years. After theoretical work dominated the earlier years of research in this area, newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy, marketing and company strategies. Furthermore, insights from the study of social networks have been applied to analyse how consumers interact with each other. The paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate.     

THE EVOLUTION OF STOCK MARKET EFFICIENCY OVER TIME: A SURVEY OF THE EMPIRICAL LITERATURE

Abstract This paper provides a systematic review of the weak‐form market efficiency literature that examines return predictability from past price changes, with an exclusive focus on the stock markets. Our survey shows that the bulk of the empirical studies examine whether the stock market under study is or is not weak‐form efficient in the absolute sense, assuming that the level of market efficiency remains unchanged throughout the estimation period. However, the possibility of time‐varying weak‐form market efficiency has received increasing attention in recent years. We categorize these emerging studies based on the research framework adopted, namely non‐overlapping sub‐period analysis, time‐varying parameter model and rolling estimation window. An encouraging development is that the documented empirical evidence of evolving stock return predictability can be rationalized within the framework of the adaptive markets hypothesis.     

WHAT DETERMINES THE ELASTICITY OF SUBSTITUTION BETWEEN CAPITAL AND LABOR? A LITERATURE REVIEW

This paper provides the first comprehensive review of the empirical and theoretical literature on the determinants of the elasticity of substitution between capital and labor. Our focus is on the two-input constant elasticity of substitution (CES) production function. We start by presenting four concise observations that summarize the empirical literature on the estimation of . Motivated by these observations, the main part of this survey then focuses on potential determinants of capital–labor substitution. We first review several approaches to the microfoundation of production functions where the elasticity of substitution (EOS) is treated as a purely technological parameter. Second, we outline the construction of an aggregate elasticity of substitution (AES) in a multi-sectoral framework and investigate its dependence on underlying intra- and inter-sectoral substitution. Third, we discuss the influence of the institutional framework on the extent of factor substitution. Overall, this survey highlights that the effective elasticity of substitution (EES), which is typically estimated in empirical studies, is generally not an immutable deep parameter but depends on a multitude of technological, non-technological, and institutional determinants. Based on these insights, the final section identifies a number of potential empirical and theoretical avenues for future research.     

CHARTERS,PARTNERSHIPS AND NATURAL RESOURCES: TWO CASES OF ENDOGENOUS REGULATION IN ITALY

This paper illustrates two examples of natural resources management drawn from Italian history: the rural charter system in the current province of Trento and the rural partnership system in Nonantola in the province of Modena. These institutions lasted for many centuries, and survived and evolved in the contemporary legal system. It is concluded that both the cases can be defined as ‘robust’ institutions for the successful management of common pool resources.     

THE USE AND ABUSE OF MARKETS IN HOUSING POLICY

This paper argues that, despite its rhetoric in support of markets, government does not understand how markets work, but is rather trying to use certain aspects of markets to control social housing. The paper looks at three areas: first, the idea of private finance and how this is used by government as a form of public policy; second, the notion of risk and whether it actually occurs in social housing; and third, the contention that government is incapable of appreciating the manner in which markets operate because it only wishes to provide safe options and so cannot countenance real choice and competition.     

THE EFFECTS OF PENSION FUNDS ON MARKETS PERFORMANCE: A REVIEW

The worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi‐pillar pension systems and enhance pension funds. For this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades. In this paper, we provide an updated review of the empirical advances in this field of study, with particular focus on the effects that pension funds produce on labour markets, financial markets and economic growth.     

THE THREAT EFFECT OF ACTIVE LABOR MARKET PROGRAMS: A SYSTEMATIC REVIEW

This paper is a systematic review of the threat effect of active labor market programs for unemployed individuals. The threat effect is the induced change in the hazard rate of leaving unemployment prior to program participation. Studies included in the review all estimated a threat effect, with the participants in all cases being unemployed individuals in receipt of benefit of some kind during their tenure of unemployment. Eight of these studies have been included in a meta-analysis: The meta-analysis, which has been carried out using a random effects model to account for heterogeneity, indicated a hazard ratio of 1.25 for the pooled estimate. We conclude that active labor market programs constitute a statistically significant threat effect, although it is modest.     

RISK‐COPING,LAND TENURE AND LAND MARKETS: AN OVERVIEW OF THE LITERATURE

Over the last decades, a significant amount of literature has been published on informal risk‐coping in developing countries. In this paper, we review how informal risk‐coping has been addressed in the land tenure literature from two main perspectives: a first stream of research looks at how customary tenure and communal property perform key informal risk‐coping functions. A second subset of this literature analyses how informal risk‐coping creates land market imperfections through sharecropping or distress sales. The segmentation of the literature results from the Demsetzian property rights framework. Further research on risk‐coping and land tenure would benefit from examining recent work on property regimes.     

INTERCHANGE FEES IN PAYMENT CARD SYSTEMS: A SURVEY OF THE LITERATURE

Abstract This paper surveys the recent literature about interchange fees in payment card systems. Interchange fees are used by payment platforms to allocate the total cost of a payment card transaction between the cardholder's bank, the issuer, and the merchant's bank, the acquirer. Each time a consumer pays by card, its bank receives an interchange fee from the merchants' bank. Banks argue that interchange fees are needed to encourage the use of electronic payment instruments, whereas merchants claim that they artificially inflate the cost of accepting cards. This paper sheds light on the ongoing debate that opposes banks to the regulatory institutions or the competition authorities in various countries, by reviewing the theoretical results of the literature and highlighting some unanswered issues.     

CAPITALIZATION AND THE THEORY OF LOCAL PUBLIC FINANCE: AN INTERPRETIVE ESSAY

Abstract. The Tiebout hypothesis that consumer mobility and interjurisdictional competition leads to efficient provision of local services has provoked much controversy and debate in recent years. This article summarizes the opposing and conflicting viewpoints on this subject and presents a synthesis of the theoretical and empirical literature. The basic conclusion of this literature is that only under very restrictive assumptions will foot-voting and interjurisdictional competition ensure allocative efficiency in the local public sector. Nevertheless, the Tiebout mechanism offers important insights for public policy debates on the assignment of taxes and services and the design of equalization grants. Oates' suggestion that capitalization of fiscal differentials into residential property values provides an empirical test of the Tiebout hypothesis also generated an intense debate on the theoretical validity of this procedure and a heightened interest in its empirical applications. This debate is evaluated and an overview is given of the leading empirical approaches to test the efficiency and equity implications of the Tiebout mechanism. Controversial empirical issues such as the choice of the tax price term, the level of aggregation and econometric estimation problems are highlighted in this part of the survey.     

THE EFFECTIVENESS OF ACTIVE LABOR MARKET POLICIES: A META‐ANALYSIS

This paper provides a meta‐analysis of microeconometric evaluation studies on the effectiveness of active labor market policies. The analysis is built upon a systematically assembled data set of causal impact estimates from 57 experimental and quasi‐experimental studies, providing 654 estimates published between January 1990 and December 2017. We distinguish between the short and longer term impacts in our analysis; at 6, 12, 24, and 36 months after program start. After correcting for publication bias and country‐specific macroeconomic characteristics, subsidized labor and public employment programs have negative short‐term impacts, which gradually turn positive in the longer run. Schemes with enhanced services including job‐search assistance and training programs do not have these negative short‐term effects, and stay positive from 6 until 36 months after program start.     

EXPLAINING DIFFERENCES IN EFFICIENCY: A META‐STUDY ON LOCAL GOVERNMENT LITERATURE

This paper reviews the literature on local government efficiency by meta‐reviewing 360 observations retrieved from 54 papers published from 1993 to 2016. The meta‐regression is based on a random‐effects model estimated with the two‐step random‐effects maximum likelihood (REML) technique proposed by Gallet and Doucouliagos. Results indicate that the study design matters when estimating a frontier in local government. We find that studies focusing on technical efficiency provide higher efficiency scores than works evaluating cost efficiency. The same applies when using panel data instead of cross‐section data. Interestingly, studies that use the Free Disposal Hull (FDH) approach yield, on average, higher efficiency scores than papers employing the data envelopment analysis (DEA) method, thereby suggesting that in this literature the convexity hypothesis of the production set is a matter. Finally, the efficiency of local government increases with the level of development of the analysed countries and is positively related to the national integrity of the legal system. The opposite holds when considering the corruption.     

TOWARDS A SYNTHESIS OF ISLAM AND THE MARKET ECONOMY? THE JUSTICE AND DEVELOPMENT PARTY'S ECONOMIC REFORMS IN TURKEY

Turkey has some unique characteristics, one of which is that it is the only Muslim country seeking to join the European Union. Internally, it has been going through a new and challenging experience in recent years: implementing free-market economic policies under a 'Conservative Democrat' government, the leadership of which comes from moderate Islamism. Many observers think that Turkish experience shows how Islam and the market economy are compatible. This article critically evaluates these reformist economic policies implemented since late 2002 and highlights the major factors behind Turkey's success story.     

PRODUCTIVITY AND STRUCTURAL CHANGE: A REVIEW OF THE LITERATURE

Abstract.  This paper is a survey of the existing research on structural change at various levels of aggregation with a special focus on the relation to productivity and technological change. The exposition covers the research concerning the development of the three main sectors of the private economy, multisector growth models and recent evolutionary theories of structural change. Empirical studies of the reallocation of market or sector shares as a result of differential productivity developments are also discussed. The synthesis emphasizes the crucial interaction of supply- and demand-side forces in shaping structural change.     

SUSTAINABILITY AND WELLBEING: A SCIENTOMETRIC AND BIBLIOMETRIC REVIEW OF THE LITERATURE

Interdisciplinary research on measuring the progress towards sustainability and well-being (SaW) from different perspectives and in various contexts has developed dramatically over recent decades. This growth in the literature has not only added an enormous number of dimensions to the SaW debate, but the sheer scale of the expansion has challenged researchers to be able to conduct a comprehensive analysis of the available SaW indicators. In this work, we have proposed a hybrid method comprised of sophisticated scientometric analysis to summarise scientific developments in the massive text corpus of the SaW literature in conjunction with a more traditional literature review to categorise the ‘fuzzy’ details that remain. Scientometric analysis highlights that the developed OECD countries play a vital role in the development and applications of SaW indicators and we describe key developments in this regard via a range of graphical approaches. Using an extensive collection of existing SaW indicators, the analysis is then summarised in a matrix of ranked indicators which serve as a powerful tool to compare, contrast, filter and select indicators for SaW assessment with minimum redundancies between indicators. The approach undertaken in this study is intended to be flexible and can be extended and applied to other fields of research.     

OWNERSHIP CONCENTRATION AND FIRM PERFORMANCE IN EMERGING MARKETS: A META‐ANALYSIS

The literature concerned with relations between ownership concentration and corporate performance in emerging markets presents conflicting theoretical predications and inconclusive empirical results. We use meta‐analytical techniques to integrate the diverse empirical findings and investigate factors contribute to the inconsistencies in the empirical evidence. Using 419 correlations collected from 42 primary studies of listed corporations in 18 emerging markets, heterogeneity tests show that only a small proportion of the variation in reported ownership concentration–performance relations can be attributed to sampling error. Our meta‐regressions reveal how population differences, researchers’ modeling choices, and inadequate treatment of endogeneity explain a large portion of the true heterogeneity. After adjusting for these effects, we find ownership concentration has negative relation with firm performance across countries. Our results emphasize the importance of model specification and methods of addressing endogeneity, and support further comparative study of the ownership concentration–corporate performance relation between countries with seemingly similar corporate governance environments.     

COALITION FORMATION AND BARGAINING PROTOCOLS: A REVIEW OF THE LITERATURE

This paper offers a review of the vast literature regarding bargaining and coalition formation. This topic has been generally described as the attempt to provide strategic foundations to cooperative solution concepts. It can therefore be seen as the linking ring between the non‐cooperative and the cooperative game‐theoretic approach to coalition formation. Its central role in economic theory and its relatively long history that goes back to the Nash program have fostered a large academic production, including surveys. Nonetheless, this paper will focus on an aspect that is often neglected in the dedicated surveys: the specificities of the bargaining protocols leading to different outcomes. Although generally downgraded to the rank of details, the differences in bargaining protocols, even when minor, can cause significant changes in fundamental aspects such as the possibility to reach full cooperation, the distribution of final pay‐offs and the time taken to reach an agreement. Focused on externalities‐free games, therefore on bargaining protocols sustaining solution concepts for cooperative games in characteristic function form, the paper aims at providing a brief but exhaustive review of the topic that could result in a very useful tool for any researcher approaching the subject of coalitional bargaining.     

A CLOSER LOOK AT VALUE PREMIUM: LITERATURE REVIEW AND SYNTHESIS

This paper provides a systematic review of value premium literature that examines the performance difference between value and growth stocks and the possible reasons for it. We compare and synthesize the results from the different regional stock markets and different sample periods. The literature is categorized according to stock selection criteria that are based on either individual valuation ratios, such as E/P, B/P, D/P, S/P, CF/P, and enterprise value-based multiples, or composite value criteria that aim to capture more than one dimension of relative value simultaneously or combine them with other classification criteria. We also compare the efficacy of various selection criteria to each other and synthesize the literature on the explanations for the value anomalies. The overall evidence shows that the best criterion varies over time and across the markets. The relative efficacy of different valuation criteria also seems to depend on numerous methodological choices. Recent studies have given mild evidence that combining traditional valuation ratios either with each other or with some financial statement variables could at least in some cases enhance the value premium, although very few studies have provided transparent comparisons between the results based on individual valuation ratios and those based on composite value criteria.     

EDUCATION AND ENTREPRENEURSHIP SELECTION AND PERFORMANCE: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract This paper provides a review of empirical studies into the impact of formal schooling on entrepreneurship selection and performance in industrial countries. We describe the main effects found in the literature, we explain the variance in results across almost a hundred studies, and we put the empirical results in the context of related economic theory and the much further developed literature in labor economics (studying the rate of return to education among wage employees). Five main conclusions result from this meta‐analysis. First, the impact of education on selection into entrepreneurship is insignificant. Second, the effect of education on performance is positive and significant. Third, the return to a marginal year of schooling is 6.1% for an entrepreneur. Fourth, the effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA. Fifth, the returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non‐whites or immigrants. In conclusion, we offer a number of suggestions to move the research frontier in this area of inquiry. The entrepreneurship literature on education can benefit from the technical sophistication used to estimate the returns to schooling for employees.     

THE ROLE OF PATENTS IN INFORMATION AND COMMUNICATION TECHNOLOGIES: A SURVEY OF THE LITERATURE

During the last few decades, the number of patents in information and communication technologies has increased considerably. An increasing number of patents and the associated fragmentation of IP rights have generated a series of potentially problematic consequences. Patent thickets, royalty stacking, the emergence of patent assertion entities, increased patent litigation – particularly around standard essential patents – and the difficulties with defining fair, reasonable, and nondiscriminatory licensing terms are some of the most debated issues in the literature that we review in this paper. We devote a specific section of our survey to patent quality, currently one of the most debated issues surrounding the patent system. In our analysis, we mix theoretical and empirical arguments with a more policy‐oriented reasoning. This allows us to better position the different issues in the relevant political and economic context.