Product market competition and access to credit

In this paper, we unveil a disregarded benefit of product market competition for firms. We introduce the probability of bankruptcy in a simple model where firms compete à la Cournot and apply for collateralized bank loans to undertake productive investments. We show that the number of competitors and the existence of outsiders willing to acquire the productive assets of distressed incumbents affect the equilibrium share of investment financed by bank credit. Using a sample of Italian manufacturing firms, mostly small- and medium-sized enterprises (SMEs), we found evidence showing that the degree of product market competition is positively correlated with the share of investment financed by bank credit only when outsiders are absent.     

A Stock Flow Consistent Analysis of a Schumpeterian Innovation Economy

Schumpeter argued that boom and bust cycles are inherent to the rise of innovation and constitute an unavoidable consequence of the way the capitalist system reacts to the emergence of a wave of innovations. This contribution aims to describe Schumpeterian economic development in a ‘monetary theory of production’ framework, emphasizing the crucial role played by credit creation, conceived as ‘the monetary complement’ of innovation. By adopting a stock flow consistent analytical approach, we analyze both the structural change process triggered in the real economy by the emergence of innovation, and the monetary dynamics arising during the various stages of the development process.     

Promote or Perish? A brief note on academic social networking sites and academic reputation

ABSTRACT

This commentary explores some of the reputational issues of using academic social networking sites (ASNS) such as ResearchGate, ResearcherID, ORCID, Academia.edu, Google Scholar, and Mendeley for academic self-promotion and considers whether the adage of ‘Publish or Perish’ has been recently overshadowed by the new imperative of ‘Promote or Perish’?     

Crowdfunding for the development of smart cities

In recent years, many cities have experienced new forms of collaboration that have an impact on citizens and entrepreneurs. The integration of this field of study with civic crowdfunding can influence economic growth and community building, which may be beneficial for both policymakers and practitioners alike. Civic crowdfunding is a financial model through which citizens, in collaboration with government and local authorities, fund projects to provide a community service. The development of smart cities is related to civic engagement, empowerment, and participation intended to be part of crowdsourcing or entrepreneurial activities. In this sense, cities play a vital role as drivers of (open) innovation and entrepreneurship. Based on these considerations, this study proposes an explorative and qualitative approach to investigate the civic crowdfunding phenomenon and its ability to promote community development. Our exploratory analysis of six projects highlights the challenges and opportunities of civic crowdfunding for the creation, development, and improvement of more inclusive cities.     

The role of trade and offshoring in the determination of relative wages and child labour

Incorporating family decisions in a two-period model of the world economy, we predict that trade liberalization raises the skill premium and reduces child labour in developing countries where the adult labour force is sufficiently well educated to attract production activities from abroad that will increase the demand for skilled relative to unskilled labour. Elsewhere, liberalization will reduce the skill premium, but it will not necessarily raise child labour. Our prediction is not rejected by the data, and it explains why child labour is negatively associated with trade openness in those developing countries where the labour force was relatively well educated when the liberalization took place, but not elsewhere.     

Judicial Efficiency and Immigrant Entrepreneurs

Extensive research exists on the individual determinants of being an immigrant entrepreneur, concerning both social environment and human capital. However, the role of the judiciary has not been investigated yet. Analyzing more than 160,000 new micro enterprises owned by immigrants, our paper aims to fill this gap by focusing on the relation between justice and immigrant entrepreneurship. Results show that judicial efficiency is one of the determinants of self‐employment, although some differences among immigrant groups are identified. Therefore, the study confirms the key role of judicial enforcement in promoting not only growth but also the integration of these new citizens.     

Market Structures with Multi-product Firms: Welfare Analysis and Policy Implications

In the real world firms operate in more than one market and consequently can exploit scope economies and/or demand complementarities. Introducing multi-product firms in the picture makes the standard assumption that more competition is always beneficial for social welfare less clear-cut. In this paper we show that a concentrated structure can be socially preferable in the presence of scope economies, whereas a fragmented structure has to be preferred when products are close substitutes. We also identify either analytically or numerically the socially optimal market structure when aggregate output (and then consumer surplus) or total welfare are used as ranking criteria. The analysis is useful for discussing which market structure should be favored by policy makers aimed at introducing competition in sectors which were previously monopolized by state-owned firms. To that respect, our findings point out that not only the level (number of firms) but also the form (type of firms) of competition matters.     

Loyalty program structure and consumers' perceptions of status: Feeling special in a grocery store?

Loyalty programs are business practices increasingly pursued by companies in order to achieve customer loyalty. Recent studies have focused on the relationship between loyalty program structures (i.e., number and size of hierarchical tiers) and status levels (i.e., exclusivity) perceived by members. The current study examines two potential moderators of this relationship between program structure and perceived status. Specifically, the aim of our research was to test whether loyalty program structure affects status perceptions in more and less exclusive industries, and among consumers with more and less positive attitudes toward loyalty programs.An experimental design based on different scenarios was used. Two industries and three loyalty program structures were examined. In the airline industry, which is higher in perceived exclusivity, perceived status in the top tier of the loyalty program increased as the number of customers in the top tier decreased and as the number of tiers increased. Notably, however, loyalty program structure had no effect on perceived status in the supermarket industry, which is lower in perceived exclusivity. Moreover, even in the airline industry, status effects were only observed among respondents with a positive attitude toward loyalty programs. Those with neutral or negative attitudes toward loyalty programs were unaffected by the structure of the loyalty program. Thus, the effect of loyalty program structure on consumers' perceived status varied systematically across industries and across individuals.     

The effect of innovation policy on SMEs’ employment and wages in Argentina

This article evaluates the effect of the Argentinean Support Program for Organizational Change on employment and wages. The program aimed at increasing small and medium-sized enterprises’ competitiveness by co-financing technical assistance to support process and product innovation activities. Although employment is not usually the main objective of these types of programs, they are always implemented assuming that they create—or at least do not destroy—employment opportunities. We use a unique data set with information for the population of firms in Argentina from 1996 to 2008 to test this important assumption. Using a combination of fixed effects and matching, we find that both process and product innovation support increased employment and wages, with a higher impact on employment. In addition, we find that product innovation support had a larger effect on wages than process innovation support.