VERTICAL AND HORIZONTAL ECONOMIES IN THE ELECTRIC UTILITY INDUSTRY: AN INTEGRATED APPROACH

ABSTRACT ** :  The empirical literature on the cost structure of the electric utility industry traditionally focused on the measurement of specific technological properties: 1) scale economies in generation or distribution; 2) multi-product (or horizontal) scope economies at one particular stage; 3) multi-stage (or vertical) scope economies. By adopting an integrated approach, which simultaneously considers both horizontal and vertical aspects of the technology, we find the presence, on a sample of Italian electric utilities, of both vertical integration gains and horizontal scope economies at the downstream stage. In the light of recent regulatory reforms aiming at restructuring European electricity markets, our findings have important policy implications as for the proper configuration of the industry. Moreover, this methodology can be usefully applied to the study of the production structure of other public network utilities involved in similar vertical and horizontal reorganization processes.     

Rent-seeking under a weak institutional environment

This paper investigates the role of the institutional environment on economic performance when the state intervenes to correct market failure. Results demonstrate that in the presence of weak institutions rent-seeking plays a crucial role for achieving second best resources allocation.     

An evolutionary perspective on health innovation systems

This paper elaborates on the general properties of medical innovation processes. It begins with a critical review of different perspectives and methods of investigation used in various streams of research that have previously analysed technical change in the health sector. After profiling and discussing their characteristics, the paper proposes an evolutionary approach to change in medicine constructed around the notion of a ‘Health Innovation System’. Health innovation, it is argued, consists of complex bundles of new medical technologies and clinical services emerging from a highly distributed competence base. Health Innovation Systems are driven by the combination of (1) institutionally-bound interactions among agents (‘gateways’ of innovation) and (2) history-dependent trajectories of change (‘pathways’ of innovation) whose developments emerge from and feed back into the structure of the system through organised transfers of knowledge between research and clinical practice. After drawing examples from recent empirical work on clinical research in specific disease areas, the paper concludes by identifying implications for further research.

The impact of EU common agricultural policy decoupling on farm households: Income vs. investment effects

This paper analyses the effects of decoupling (as introduced in the 2003 reform of the EU Common Agricultural Policy) on farm income and investment behaviour. The results of a dynamic multi-objective household model for 80 farm households in 8 EU countries are analysed and presented through a measure of investment-income elasticity as a reaction to decoupling. The results highlight the differing and contrasting reactions of farm households to policy changes. The main conclusion is that the diversity of farm specialisations and the dynamics of long-term adaptation should be taken into account more explicitly in the evaluation of policy impacts on EU farming systems.     

Innovation adoption and training activities in SMEs

This article adopts the resource-based view and the complementarities approach to examine how small and medium enterprises (SMEs) combine the adoption of organisational and technological innovation with investments in training activities. The results of econometric analysis on a panel data-set of about 118 Italian manufacturing SMEs furnish a quite complex picture of the effects of innovation on training. On the one hand, organisational innovation seems to be related to higher investments in (formal and informal) internal training; specifically, it is the adoption of autonomous teams and multi-skilling practices that is associated with the coverage and the intensity of internal training, whereas job rotation is negatively associated with the coverage of external training. On the other hand, the general index of technological innovation does not show any significant relationship with training activities, whereas the individual technological innovation variables are associated with internal training. Specifically, the coverage of internal training is positively affected by ICT innovation and negatively affected by process innovation. These results demonstrate that SMEs have limited awareness of the risks associated with underinvesting in training during the implementation phase of the innovation process. The implications of such findings for research and practice are discussed.     

Complexity traits and synchrony of cryptocurrencies price dynamics

Decisions in Economics and Finance - In this study, we characterized the dynamics and analyzed the degree of synchronization of the time series of daily closing prices and volumes in US$ of three...     

The geography of banking: Evidence from branch closings

In the aftermath of the Great Recession, the number of bank branches declined in most developed countries. In this paper, we investigate how banks have downsized their branch networks in Italy, by comparing the pre‐ and post‐crisis spatial distribution of branches. By using a detailed data set that includes a wide set of controls for the characteristics of each bank branch, we estimate the probability of a branch being closed as a function of its distance from both proprietary and competitors' branches. We find that banks are more prone to close branches in those areas where other proprietary branches are closer and where competitors' branches are closer. This indicates that, since the start of the crisis, banks have closed branches especially in those areas where their proprietary network was relatively more populated and the competition was fiercer.     

Quantifying the Impact of Scientific Research on Agriculture

With the growing importance of science and innovation for farming, the scope for summary monetary estimates of the impact of agricultural research on productivity suggests internal rates of return of between 7 and 15 per cent, and time lags in maximum impact of around nine years. However, the extent to which the transmission process can be regarded as a ‘black box’ for econometric purposes is considered increasingly inappropriate, since the intermediate steps between research and the impacts of resulting technology adoption are increasingly complex and involve growing numbers of actors, actions and a wider set of policy objectives. Significant difficulties are encountered in quantifying research impacts, including gaps in data for dependent and explanatory variables. New features of the agricultural sector also need to be accounted for, which relate to the role of knowledge engineering, globalisation and the establishment of new impact pathways which are affecting the speed of transmission of innovations. Public support for agricultural research funding is generally justified but returns are not sufficiently high, thus requiring careful reflection on priorities for research investment. Combined use of qualitative and quantitative evaluation approaches can be complementary and more effective than relying on either alone.