Export Premia and Subcontracting Discount: Passive Strategies and Performance in Domestic and Foreign Markets

This paper contributes to the literature on firms’ productivity and exporting decisions by analysing the role played by organisational choice aspects. Rather than setting up a vertically integrated structure, manufacturers may act as subcontractors in both domestic and foreign markets, and produce to satisfy the requirements of other firms. The predictions that the most productive firms self‐select into exporting, whereas the least productive ones work as subcontractors serving the domestic market only, are tested on a sample of Italian firms observed during the 1998–2003 period. The results of our estimates highlight a ranking of firms consistent with a priori expectations, and provide a clear indication that passive exporters (i.e. those using subcontracting in foreign markets) display lower total factor productivity (TFP) values when compared with direct exporters. Moreover, only the latter category exhibits higher pre‐entry productivity levels and growth rates as well as higher post‐entry TFP growth rates. Such findings are consistent with both the self‐selection hypothesis and the learning‐by‐exporting explanation.     

Diversification, the Resource View and Productivity: Evidence from Italian Manufacturing Firms

The present paper presents a test ofthe resource view of diversification which focuses onthe relationship between the directions ofdiversification strategies and a measure of totalfactor productivity. The results are supportive of theresource theory in that firms which pursue verticalintegration strategies and/or operate in a set ofactivities which share similar research anddevelopment and advertising intensities reach higherproductivity levels. After having checked for the directions of diversification, the degree ofdiversification is not significantly related toproductivity. This suggests that the simple inclusionof variables controlling for the extent ofdiversification might not be sufficient in order tostudy the effects resulting from diversification strategies.     

Endogenous technological progress in a multi-sector growth model

This paper presents an endogenous growth model driven by human capital, where human capital can be allocated across three sectors: the production of the final consumption good, the educational sector and the production of technological capital (in the form of knowledge or ideas). In our model, which also includes public expenditure and population growth, labor augmenting technical progress is endogenous and this enriches the transitional dynamics of the economy. With respect to ideas-based growth models, we assume knowledge is produced according to a neoclassical technology, combining ideas and human capital. Such an assumption is motivated by empirical works showing the existence of significant decreasing returns in the creation of ideas at the aggregate level (as Kortum, 1993; and Pessoa, 2005) and of the weak relationship between some inputs of the knowledge production process (as the number of researchers) and the total factor productivity growth rate (as Jones, 2002). Under some general conditions, this economy exhibits the existence of a steady state equilibrium and an unstable multidimensional manifold. Numerical examples are provided to show the existence of stable arms.     

Restructuring hospital industry to control public health care expenditure: The role of input substitutability

In this paper we investigate the economic rationality of the bed downsizing process, characterising the hospital industry worldwide in the last decades, as a measure to control public health care expenditure. Considering a sample of Italian hospitals, we provide fresh evidence on the factor substitutability in the production of hospital services. Differently from other studies, based on North-American data and limited to pre-determined cost function models, we estimate a general specification (the Generalised Composite), and test it against traditional nested models (e.g. the Translog). For all the specifications we derive Allen, Morishima and Shadow elasticities of substitution between input pairs, obtaining a fairly consistent picture across all models and elasticity concepts. In particular, our results highlight a very limited degree of substitutability between factors in the production of hospital services, especially between beds and medical staff. These findings suggest that a restructuring policy of the hospital industry, which is confined to reducing the number of beds without involving workforce management, could not be a viable strategy for controlling public health care expenditure.     

Cost Savings From Generation and Distribution with an Application to Italian Electric Utilities*

In the last decade, the European Commission promoted a new regulatory framework aiming at a gradual liberalization of the energy markets. The introduction of competition among generators implies the need to separate generation from transmission and distribution activities. However, if savings can be reached by operating at different stages, vertical separation would increase the costs of providing power. This paper tests for the presence of economies from vertical integration on a sample of Italian local electric utilities and finds evidence of both multi-stage economies of scale and vertical economies. Even if the hypothesis of global subadditivity is not supported, our evidence suggests that a complete divestiture policy would entail efficiency losses. *For helpful comments and discussions, we thank two anonymous referees, Graziano Abrate, Bruno Bosco, Diego Piacentino, and participants at the 31st Annual Conference of the European Association for Research in Industrial Economics (EARIE), Berlin, Germany, 2–5 September, 2004, the 60th Congress of the International Institute of Public Finance (IIPF), Milan, Italy, 23–26 August, 2004, and seminars held at the Bocconi University, University of Lecce, University of Naples, University of Pavia, and University of Turin, where earlier versions of this paper were presented. The financial support of MIUR (COFIN 2002) and HERMES Research Center is gratefully acknowledged. The usual disclaimer applies. **HERMES, Center for Research on Regulated Services, Fondazione Collegio Carlo Alberto, Via Real Collegio 30, 10024 Moncalieri (TO), Italy, http://www.hermesricerche.it.     

An analysis of the knowledge base of scientific research and development business services

It is argued that the literature on scientific research and development outsourcing focuses mostly on client firms, that is, the demand side, while little is known of the characteristics of the supplying sector. The present paper tackles this gap by elaborating an exploratory analysis of this business service sector with a view to analyze the main patterns of specialization and their evolution over time. Using data on job content and skill requirements in the United States, we elaborate a knowledge taxonomy of the sector and explore how different forms of knowledge coexist and coevolve.     

Power laws and the market structure of tourism industry

In this article, we use both graphical and analytical methods to investigate the market structure of one of the world’s fastest growing industries. For the German and Italian datasets, we show that the size distribution of tourism industry is heavy-tailed and consistent with a power-law behavior in its upper tail. Such a behavior seems quite persistent over the time horizon covered by our study, provided that during the period 2004–2009, the shape parameter is always in the vicinity of 2.5 for Germany and 2.6 for Italy. Size of the tourism industry has been proxied by the lodging capacity of hotel establishments: hotels, boarding houses, inns, lodging houses, motels, apartment hotels, tourist villages, and tourist apartments. Data belonging to the EUROSTAT and ISTAT databases have been used for Germany and Italy, respectively. Our aim is not to provide the best fit to the data but simply to focus our attention on the right tail of the size distribution of tourism industry. Understanding the behavior of the upper tail is indeed fundamental to capture the structure of the market. This study adds a new evidence to the list of empirical phenomena for which power laws hold.     

Improving value transfer through socio‐economic adjustments in a multicountry choice experiment of water conservation alternatives

This study tests the transferability of the nonmarket values of water conservation for domestic and environmental purposes across three south European countries and Australia applying a common choice experiment design. Different approaches are followed to test the transferability of the estimated values, aiming to minimise transfer errors for use in policy analysis, comparing both single‐ and multicountry transfers, with and without socio‐economic adjustments. Within Europe, significant differences are found between implicit prices for environmental water use, but not for domestic water use. In the Australian case study, alleviating restrictions on domestic water use has no significant value. Pooling the three European samples improves the transferability of the environmental flow values between Europe and Australia. Results show that a reduction in transfer error is achieved when controlling for unobserved and observed preference heterogeneity in the single‐ and multicountry transfers, providing additional support for the superiority of socio‐economic adjustment procedures in value transfer.     

China Spillovers: New Evidence from Time-Varying Estimates

The recent “rebalancing” of China’s economy has raised concerns that the country’s growth slowdown may have large global implications. This note looks at this issue by analyzing the effects of China’s growth shocks on the output of other countries and how these effects have changed over time. Estimates indicate that the magnitude of China’s spillovers has steadily increased during the last two decades, but remains yet limited. Spillovers are larger in neighboring (Asian) countries and in emerging markets and developing economies. Trade linkages remain main transmission channels. In addition, a negative shock in China has (marginal) positive effects for net commodity importers while negative for net commodity exporters.