Spatial stochastic frontier models: controlling spatial global and local heterogeneity

In the last decade special attention has been focused on estimating a firm’s efficiency and productivity; Stochastic Frontier Analysis (SFA) has been one of the most used techniques that allows the separation of inefficiency from stochastic noise, assuming homogeneous technology is available to all producers and that there is independence between observations. However, this second assumption is violated data are spatial auto-correlated, thus biasing statistical inference. Attention has, therefore, shifted to models that allow the controlling of heterogeneity introducing, in the model or in the error term, contextual variables correlated with inefficiency. In our paper we propose viewing the spatial external factors (natural or artificial) in a new way: instead of identifying ex-ante a multitude of determinants, often statistically and economically difficult to detect, we suggested using an original methodology that, following a classical SFA approach, splits efficiency into three components: the first one is linked to the spatial lag, the second one to the DMU’s specificities, and the third to the error term. Finally, we tested our method using simulated data and examined the Italian wine sector, testing the ability to control spatial, global and local heterogeneity.     

Building a computable general equilibrium tax model for Italy

In this paper, we develop a multi-sectoral computable general equilibrium tax model for Italy allowing for a number of fiscal tools. We illustrate the methodology for modelling and accommodating the full range of direct and indirect taxes into the national general equilibrium model. In particular, we build a commodity tax matrix by commodity, source, user and tax type; and a production tax matrix by industry and tax type. We also put a special emphasis on the institutional sector accounts, incorporating a detailed system of equations. Our model provides a powerful tool for acquiring new insights in fiscal policy analysis, through the assessment of tailored tax reforms, which can consist of either changes in tax rates and tax bases for indirect and direct taxes. Finally, to validate the model we perform an equalizing Value-Added-Tax rates reform. We find that a budget-neutral uniform tax rate reform would be GDP and welfare improving. However, results across agents and sectors vary.     

Competition and commercial media bias

This paper reviews the empirical evidence on commercial media bias (i.e., advertisers influence over media accuracy) and then introduces a simple model to summarize the main elements of the theoretical literature. The analysis provides three main policy insights for media regulators: (i) Media regulators should target their monitoring efforts towards news contents upon which advertisers are likely to share similar preferences. (ii) In advertising industries characterized by high correlation in products' qualities, an increase in the degree of competition may translate into a lower accuracy of news reports. (iii) A sufficiently high degree of competition in the market for news drives out commercial media bias.     

Credulity, lies, and costly talk

This paper studies a model of strategic communication by an informed and upwardly biased sender to one or more receivers. Applications include situations in which (i) it is costly for the sender to misrepresent information, due to legal, technological, or moral constraints, or (ii) receivers may be credulous and blindly believe the sender's recommendation. In contrast to the predictions obtained in the benchmark cheap talk model, our model admits a fully separating equilibrium, provided that the state space is unbounded above. The language used in equilibrium is inflated and naive receivers are deceived.     

Estimating Market Power with Weak A Priori Information: An Exploratory Approach to the Model-Specification Problem

Choosing the wrong theoretical model to describe an industry??s behavior may lead to biased estimates of the degree of market power. This paper presents a two-step, data-driven methodology to reduce the risk of mis-specification bias. In the first step, a sliced inverse regression identifies the significant factors that affect the industry??s pricing behavior. In the second step, a non-parametric regression of price on the SIR factors estimates the link functions. The output of the algorithm offers useful information to identify the model that best approximates the industry??s pricing behavior. In addition, the output of the algorithm is used to develop a post-estimation test for model specification.     

Cooperative movement and widespread prosperity across Italian regions

Our goal is to participate in the debate on regional well-being. To this end, we explore the relationship between prosperity and the cooperative movement at the regional level in Italy between 2010 and 2019. We summarize prosperity through an index originally proposed by Amartya Sen and we apply it to classify Italian regions. We then perform panel analyses showing that there is a positive and significant association between such an index and the cooperative presence. We detect that, and explain why, the cooperative movement contributes to the regional prosperity more through its employment than in terms of the added value it generates.     

Better to be direct? Evidence from the abolition of direct elections in Italian local governments

This paper provides evidence for the importance of direct electoral processes by investigating the consequences for public spending of an unexpected reform that repealed direct elections for local (provincial) politicians in Italy. Direct elections were substituted with indirect ones, whereby directly elected municipal politicians choose a municipal mayor to serve as provincial president. Using a difference-in-differences strategy, I document two main consequences of the reform. First, municipalities connected to the provincial presidents tend to receive disproportionately more public funds after the reform, suggesting geographic favoritism increased. Second, the share of provincial resources spent on public goods drops in favor of bureaucratic costs. I discuss suggestive evidence that these results are driven by weaker electoral incentives rather than by the selection of worse politicians.     

Monopolistic competition and new products: a conjectural equilibrium approach

In this paper we generalize the heterogeneous risk adverse agents model of diffusion of new products in a multi-firm, heterogeneous and interacting agents environment. We use a model of choice under uncertainty based on Bayesian theory. We discuss the possibility of product failures, the set of equilibria, their stability and some welfare properties depending on the degree of diversification.     

Matching rules

Institutions often utilize matching rules to achieve cooperative outcomes. However, the equilibrium induced by a matching rule may not be socially optimal. After presenting the case in which matching rules yield privately and socially optimal levels of cooperation, this article identifies the conditions which generate inefficient cooperation. Matching rules undershoot (i.e. parties cooperate less than is socially optimal) in one group of cases. In a second, more puzzling case, matching rules overshoot (i.e. parties that interact under a matching constraint are induced to cooperate more than is socially optimal). This paper identifies the conditions for such occurrences. Copyright © 2008 John Wiley & Sons, Ltd.