Profit margins and business cycles in the Brazilian industry: a panel data study

The paper investigates the relationship between profit margins and business cycle in the Brazilian industry during the 1992–1998 period, taking as reference a dynamic panel data model founded around a conjectural variation framework. The empirical results indicate procyclical behaviour of profit margins for the aggregate business cycle but is less clear in the case of sector-specific business cycle variables. Among the most robust results, one can highlight the roles of lagged profitability and import intensity and the negligible role of union density. Schmalensee in (American Economic Review 75, pp. 341–51) outlined three theoretical interpretations associated with the empirical model (classical, revisionist and managerial). Econometric tests on the related restrictions do not allow one to exclusively legitimate any of the three interpretations.     

Differentiated credence goods and price competition

This paper analyses price competition between two firms producing horizontally and vertically differentiated goods. These are assumed to be credence goods, as consumers can hardly ascertain the quality of the commodities. To illustrate the model, we adapt it to represent a newspaper industry with two outlets, when the population of readers have preferences both on the political stance of the newspapers and on the accuracy of the news they dispatch.     

Welfare effects of unbundling under different regulatory regimes in natural gas markets

In this paper, we develop a theoretical model that enriches the literature on the pros and cons of ownership unbundling vis-à-vis lighter unbundling frameworks in the natural gas markets. For each regulatory framework, we compute equilibrium outcomes when an incumbent firm and a new entrant compete à la Cournot in the final gas market. We find that the entrant’s contracting conditions in the upstream market and the transmission tariff are key determinants of the market structure in the downstream gas market (both with ownership and with legal unbundling). We also study how the regulator must optimally set transmission tariffs in each of the two unbundling regimes. We conclude that welfare maximizing tariffs often require free access to the transmission network (in both regulatoy regimes). However, when the regulator aims at promoting the break-even of the regulated transmission system operator, the first-best tariff is unfeasible in both regimes. Hence, we study a more realistic set-up, in which the regulator’s action is constrained by the break-even of the regulated firm (the transmission system operator). In this set-up, we find that, for a given transmission tariff, final prices in the downstream market are always higher with ownership unbundling than with legal unbundling.     

Information Technology and Organizational Practices: An Exploratory Sectoral Analysis

ABSTRACT

Rapid price declines are likely to facilitate the increasing diffusion of information technology (IT) in industrial firms. Recent contributions by Bresnahan et al. (2002), however, have emphasized the interdependence between IT adoption and workplace organization. The present paper undertakes an exploratory analysis of the complementarities between IT adoption and the utilization of modern organizational practices. The analysis considers 3-digit sectoral data on the Brazilian manufacturing industry in 1996. A multivariate statistical analysis of canonical correlation analysis enabled the investigation of the overall relationship amongst a group of variables reflecting IT adoption (comprising the number of microcomputers per employee (median value), the percentage of firms providing computer training for employees, the percentage of firms with Internet connection and the percentage of firms with intranet (internal data communication network)), and amongst another group of variables reflecting the adoption of modern organizational practices (comprised of the percentage of firms adopting total quality management, statistical control of processes, internal just-in-time and improvement groups (Kaizen)). The results indicated a significant association between the two groups of variables, while the individual variables, in the majority of the cases, displayed positive and significant correlations within their own group. The evidence appears to support the perception that the adoption of IT is favored in an environment characterized by the utilization of modern organizational practices.

RESUMEN. Es bien probable que las vertiginosa bajas sufridas por los precios, faciliten la creciente divulgación de la tecnología de la información (TI) en las empresas industriales. Sin embargo, recientes contribuciones de Bresnahan et al. (2002), han recalcado la interdependencia existente entre la adopción de la TI y la organización del entorno de trabajo. El análisis considera datos sectoriales de 3 dígitos sobre la industria fabril brasileña en 1996. La estadística analítica multivariada del análisis de la correlación canónica permitió investigar la relación general entre el grupo de variables que reflejan la adopción de la TI (considerando el número de microcomputadoras por empleado [valor medio], el porcentaje de firmas suministrando entrenamiento en computación a sus empleados, el porcentaje de empresas con conexión a la Internet y el porcentaje de empresas con intranet (red interna de comunicación de datos)), y entre otro grupo de variables que reflejan la adopción de prácticas organizacionales modernas (abarcando el porcentaje de empresas que adoptan la gestión de calidad total, el control estadístico de los procesos, Just-in-time interno y grupos de mejoría (Kaizen)). Los resultados indican la existencia de una asociación significativa entre ambos grupos de variables mientras que, en la mayoría de los casos, las variables individuales mostraron tener importantes correlaciones positivas dentro de su propio grupo. Las pruebas parecen respaldar la percepción de que, la adopción de la TI, favorece la existencia de un entorno que se caracteriza por el uso de prácticas organizacionales modernas.

RESUMO. Rápidos declínios nos preços tendem a facilitar a difus$aUo crescente da tecnologia da informação (TI) nas empresas industriais. Contribuições recentes de Bresnahan et al. (2002), porém, enfatizaram a interdependência entre a adoção da TI e a organização do local de trabalho. Este artigo realiza uma análise exploratória das complement-aridades entre a adoção da TI e a utilização de práticas organizacionais modernas. A análise considera dados setoriais de 3 dígitos sobre o setor industrial brasileiro em 1996. Uma análise estatística multivariáveis de correlações can$oCnicas permitiu a investigação da relação geral entre um grupo de variáveis refletindo a adoção da TI (incluindo o número de microcomputadores por funcionário (valor mediano), a porcentagem de empresas fornecendo treinamento em informática aos funcionários, a porcentagem de empresas conectadas à Internet e a porcentagem de empresas com intranet (rede de comunicação de dados interna)) e outro grupo de variáveis refletindo a adoção de práticas organizacionais modernas (constituídas da porcentagem de empresas que adotam a gestão da qualidade total, o controle estatístico de processos, just-in-time interno e grupos de melhoria (Kaizen)). Os resultados indicaram uma associação significativa entre os dois grupos de variáveis, enquanto as variáveis individuais, na maioria dos casos, exibiram correlações positivas e significativas dentro de seus próprios grupos. Os dados parecem respaldar a percepção de que a adoção da TI é favorecida num ambiente caracterizado pela utilização de práticas organizacionais modernas.     

Ramsey Pricing and Regulator's Social Welfare Weights: An Empirical Application

The paper aims at uncovering the implicit regulator's social welfare weights within a generic Ramsey pricing structure allowing for distinct weights. The methodology is applied to U.S. water utilities for residential and non-residential water services, implying that the weights were virtually identical and thus no cross-subsidies occurred across those goods.     

The Amenity Value of English Nature: A Hedonic Price Approach

Using a hedonic property price approach, we estimate the amenity value associated with proximity to habitats, designated areas, domestic gardens and other natural amenities in England. There is a long tradition of studies looking at the effect of environmental amenities and disamenities on property prices. But, to our knowledge, this is the first nationwide study of the value of proximity to a large number of natural amenities in England. We analysed 1 million housing transactions over 1996–2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude. Gardens, green space and areas of water within the census ward all attract a considerable positive price premium. There is also a strong positive effect from freshwater and flood plain locations, broadleaved woodland, coniferous woodland and enclosed farmland. Increasing distance to natural amenities such as rivers, National Parks and National Trust sites is unambiguously associated with a fall in house prices. Our preferred regression specifications control for unobserved labour market and other geographical factors using Travel to Work Area fixed effects, and the estimates are fairly insensitive to changes in specification and sample. This provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in England. Overall, we conclude that the housing market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities.