On the optimality of privacy in sequential contracting

This paper studies the exchange of information between two principals who contract sequentially with the same agent, as in the case of a buyer who purchases from multiple sellers. We show that when (a) the upstream principal is not personally interested in the downstream level of trade, (b) the agent's valuations are positively correlated, and (c) preferences in the downstream relationship are separable, then it is optimal for the upstream principal to offer the agent full privacy. On the contrary, when any of these conditions is violated, there exist preferences for which disclosure is strictly optimal, even if the downstream principal does not pay for the information. We also examine the effects of disclosure on welfare and show that it does not necessarily reduce the agent's surplus in the two relationships and in some cases may even yield a Pareto improvement.     

Shaping the beliefs of the majority. Pluralism and competition in mass information

This paper analyses a market where two sources of information sell reports to a population of readers. Sources care about the outcome of a two-party election where the readers vote according to the information received. The paper discusses whether or not pluralism matters as regards the truthfulness of information disclosures at an equilibrium, and whether we should expect the majority of the population to be less well informed than the minority. Given the definition adopted in the paper, pluralism is found to matter only to a limited extent: the minority source provides better information than the majority source, independently of whether they share or not the same political goals. On the other hand, the pattern with a well informed élite and a less informed majority turns out to be an equilibrium outcome when political choices are made exclusively by the winning party. The paper also compares the previous case with the one where political choices are influenced by both parties, to an extent which depends in a continuous way on their shares in the population. (JEL: L82, Z1, D72)     

INTERNAL REGULATION BY MIXED ENTERPRISES: THE CASE OF THE ITALIAN WATER SECTOR

ABSTRACT ** :  This paper aims at proposing an economic analysis of mixed enterprises in local utilities. We suggest that the public service concession to mixed enterprises could embody a noteworthy substitute to the traditional public provision and the concession to totally private enterprises. The starting point of the entire analysis is that ownership allows the (public) owner to gather more information about the actual management of the firm, according to property rights theory. Following it, we conclude that under certain conditions mixed enterprises could significantly reduce asymmetric information between regulators and regulated firms by implementing a sort of 'internal' regulation. With more information, the public authority can stimulate the private operator to be more efficient and can monitor it more effectively with respect to the fulfilment of contractual obligations. Moreover, concerning the latter function, the board of directors of these enterprises can be the suitable place where public and private representatives can meet to solve all disputes arising from incomplete contracts.     

Patterns of dominant flows in the world trade web

The large-scale organization of the world economies is exhibiting increasing levels of local heterogeneity and global interdependency. Understanding the relation between local and global features calls for analytical tools able to uncover the global emerging organization of the international trade network. Here we analyze the world network of bilateral trade imbalances and characterize its overall flux organization, unraveling local and global high-flux pathways that define the backbone of the trade system. We develop a general procedure capable to progressively filter out in a consistent and quantitative way the dominant trade channels. This procedure is completely general and can be applied to any weighted network to detect the underlying structure of transport flows. The trade fluxes properties of the world trade web determine a ranking of trade partnerships that highlights global interdependencies, providing information not accessible by simple local analysis. The present work provides new quantitative tools for a dynamical approach to the propagation of economic crises.     

On the design of cooperative vendors’ networks in retail food supply chains: a logistics-driven approach

This paper explores the impact of the adoption of a cooperative approach on retail food supply chains, whose performances are strongly affected by the daily planning of deliveries from vendors. This approach requires a horizontal communication among vendors, and might result in minimising the overall transport costs. Nevertheless, the proper trade-off between costs and return is hard to be foreseen. Building on existing studies, this paper investigates the benefits and the opportunities deriving from the vendors’ collaboration on the delivery process. We provide a decision support tool using an integer linear programming model to explore in a what-if multi-scenario analysis the trade-off between competitive and cooperative delivery regimes. The distribution of order release and fleet availability couple with the geography of the network, allowing for the identification of thresholds of mutual convenience in shifting from a competitive to a cooperative regime. Our methodology, applied to a case study from a regional retailer supply chain, highlights evident benefits, which are sometimes up to 40% of the overall costs, for the retailer, the carriers, and the vendors. Furthermore, accounting for those costs, the tool identifies, for a given supply chain, who actually gains from the collaboration and what those gains are.     

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.     

The consequences of voluntary traceability system for supply chain relationships. An application of transaction cost economics

This paper analyses the effects of voluntary traceability on vertical relationships within food supply chains using a transaction cost perspective. The analysis makes reference to the Italian situation where the national standard organization has introduced a private standard for traceability that provides a higher degree of information associated with the individual product than the European mandatory traceability system. A survey was conducted by questionnaire to assess changes in transaction characteristics, costs and governance after the introduction of voluntary traceability. The sample represents all Italian firms applying this standard. Factorial and cluster analyses were applied to find the different reorganizations of transactions. The results highlight an increase in asset specificity and a decrease in the uncertainty level throughout the supply chains. The introduction of voluntary traceability shows increased vertical coordination for firms that previously used oral agreements and variation in transactions conditions for firms using contracts. Instead vertically integrated firms do not reveal any variation in the governance of transactions as they are already internally safeguarded.     

Land inequality,government ideology and agricultural protection

This paper presents an empirical investigation of how agricultural land ownership inequality and government ideology (right-wing vs. left-wing) affect agricultural protection. Theoretically, the links are quite ambiguous, switching from positive to negative depending on the structure of the underlying political economic model – i.e. pressure groups vs. median voter approach. The data show, overall, that protection is decreasing in land inequality and with left-wing government orientation, but not in a linear fashion: left-wing governments tend to support agriculture in more unequal societies. There is some evidence that the relationship holds better in democracies than in dictatorships.