The contribution of start-ups and young firms to industry-level efficiency growth

This article examines the impact of start-ups (active for 1 up to 5 years) and young firms (active for 6 up to 10 years) on industry-level efficiency growth in six EU countries, covering the period 2002–2009. Using semi-parametric estimates of meta-frontier efficiency, it is found that surviving entrants gradually raise their efficiency level in all countries considered. Firm-level efficiency growth decreases with firm age, whereas reallocation towards efficient firms contributes more to industry-level growth as firms mature. The relative contribution of start-ups appears to have been important as they actually contributed positively to overall efficiency growth which, over the period under consideration, was negative in most countries, even before the ‘Great Recession’. There are indications of ‘cleansing’, due to the exit of less efficient firms, during the ‘Great Recession’.     

Environmental Policies for Evaluating Suppliers' Performance Based on GRI Indicators

Many companies use a performance measurement system (PMS) to evaluate their suppliers' environmental performance (SEP). To do this a company can establish its own set of measures or adopt indicators borrowed from specific standards and guidelines such as the Global Reporting Initiative (GRI). However, the results of a literature review indicate that the weights of the different environmental performance indicators within an overall SEP rating are unclear. The aim of this paper is to understand what the environmental policies adopted by European manufacturing companies to evaluate their suppliers really are. In order to reach this objective, a quantitative model based on multiple linear regression has been developed. The model correlates different environmental aspects taken from the GRI set of indicators with the overall SEP rating. Interestingly, results show that performances on aspects such as transport and ISO 14001 certification do not count towards the final ranking, whereas compliance with laws and regulations is the cornerstone of the evaluation of the supplier. Other performance indicators can in some ways be linked to compliance with laws and regulations. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Two Models of the Relationship Between Money and Sovereignty: An Interpretation Based on John R. Commons’s Institutionalism

We present a theoretical analysis of monetary sovereignty based on John R. Commons’s main works. Commons wrote extensively on money and sovereignty, but he did not provide an explicit analysis of their relationship. Through the reconstruction and interpretation of his work, we propose two models of the relationship between money and sovereignty. In the first model, monetary sovereignty is owned by private banks and is potentially in competition with political sovereignty. In the second model, money can be viewed as an agent of political sovereignty, which shares some similarities with the law as an institution of sovereignty in the modern state.     

Indeterminacy, underground activities and tax evasion

This paper introduces underground activities and tax evasion into a one-sector dynamic general equilibrium model with aggregate external effects. The model presents a novel mechanism driving the self-fulfilling prophecies, which is characterized by well behaved (downward sloping) labor demand schedules. This mechanism differs from the customary one, and it is complementary to it. Compared to traditional labor market income, the income derived from underground labor activity is subject to a lower expected tax rate when considering both the probability of detection and the evasion penalty. During a belief-driven expansion, the household allocates more time to both traditional and underground labor supply. In equilibrium, this action serves to lower the effective labor tax rate faced by the household, thus providing stimulus to aggregate labor supply so as to make the initial expansion self-fulfilling. The mechanism here is akin to a “regressive tax”; the household's effective tax rate depends negatively on the level of total labor income. We argue that an underground sector, and the associated tax evasion, offer a good economic rationale for a regressive tax rate.     

Price competition between subsidized organizations

Many firms and organizations compete for customers while at the same time receiving substantial funding from outside sources, such as government subsidies. In this paper, we study the effects of two commonly observed subsidy systems on the strategic behavior of competing firms. We compare a per unit subsidy to a subsidy allocated according to the firms’ market shares. We show that, holding the total subsidy budget constant, the per unit subsidy results in lower prices, higher output, lower profits and higher overall welfare as compared to the market-share based alternative. However, we also find that a market-share based subsidy makes collusive behavior between firms much harder. Our results suggest a potential trade-off between short-run and long-run objectives: subsidy systems designed to widen participation may favor collusive behavior. The welfare implications of this trade-off are discussed. Our findings have important policy implications for the design of subsidy systems.     

Fee-for-service payments and consultation length in general practice: a work–leisure trade-off model for French GPs

This article presents an adaptation of the labour supply model applied to the independent medical sector. First, we model simultaneous General Practitioner (GP) decisions on both the leisure time and the consultation length for two payment schemes: fixed fees and unregulated fees. The objective of this econometric study is to validate the theoretical prediction that doctors under unregulated fees may make choices about the length of patient consultations independent of their personal leisure decision. Indeed, according to our empirical results, the bidirectional link between leisure choice and consultation length – verified with fixed fees – does not hold any longer under unregulated fees. Our findings can be seen as a necessary but not a sufficient condition to legitimize unregulated fees in general practice.     

Empirical factor demands and flexible functional forms: a bayesian approach

In this paper we compare classical econometrics, calibration and Bayesian inference in the context of the empirical analysis of factor demands. Our application is based on a popular flexible functional form for the firm's cost function, namely Diewert's Generalized Leontief function, and uses the well-known Berndt and Wood 1947–1971 KLEM data on the US manufacturing sector. We illustrate how the Gibbs sampling methodology can be easily used to calibrate parameter values and elasticities on the basis of previous knowledge from alternative studies on the same data, but with different functional forms. We rely on a system of mixed non-informative diffuse priors for some key parameters and informative tight priors for others. Within the Gibbs sampler, we employ rejection sampling to incorporate parameter restrictions, which are suggested by economic theory but in general rejected by economic data. Our results show that values of those parameters that relate to non-informative priors are almost equal to the standard SUR estimates, whereas differences come out for those parameters to which we have assigned informative priors. Moreover, discrepancies can be appreciated in some crucial parameter estimates obtained with or without rejection sampling.     

Economists in the PITS?

Academic economists today are caught in a “Publication Impossibility Theorem System” or PITS. In order to further their careers, they are required to publish in A-journals, but for the vast majority this is impossible because there are few slots open for them in such journals. Such academic competition maybe useful to generate hard work; however, there may be serious negative consequences: the wrong output may be produced in an inefficient way, the wrong people may be selected, and losers may react in a harmful way. This article suggests several ways to remedy this situation.