A contest model of liberalizing government procurements

This paper models liberalization of government procurements as admitting entry of foreign firms in a contest among potential rent seekers. It contributes to the literature on how institutions influence socially desirable outcomes. Liberalizing procurements reduces wasteful domestic lobbying but also increases the likelihood that a foreign firm will capture the rent. A main result is that the domestic welfare change is not monotonic in the foreign firms' abilities. Furthermore, we show that domestic liberalization policies can be inefficient from the global point of view because foreign lobbying costs can outweight productive efficiency.     

Discussion of 'Financial innovation and European housing and mortgage markets', by David Miles and Vladimir Pillonca

Although their paper stresses the potential merits of a particularfinancial innovation—a form of shared-ownership indexedcontract—Miles and Pillonca surprisingly neglect the roleof differential surges of financial innovation in explainingcross-country differences in house-price inflation. The risk-reducingpotential of their favoured instrument deserves further analysis,not least because of the sizeable political risk involved: theexperience of several other countries that have used indexedmortgage contracts shows their limited robustness to macroeconomicshocks.     

The Innovation Threshold

Summary This paper discusses a model for analysing the sales of new products. This model accounts for the fact that, even among those companies with permanent R&D activities, a fraction of the firms did not have sales of innovative products over a two-year observation period. We propose a model in which the fixed costs of introduction are a major concern in the decision-making process. We apply a censored regression model, extended by a firm-specific threshold. We use a structural model to estimate the fixed costs of introducing new products to the market, and explain subsequent sales of innovative products. We examine an indicator of innovative output, i.e. the sales of products ‘new to the firm’. We estimate fixed cost thresholds by using data from the Dutch section of the Community Innovation Survey (CIS) of 1998. R&D intensity, competition, and market structure all have a positive impact on the sales of new products. The most important factors that reduce the fixed cost threshold of introduction are product-related R&D investments, R&D subsidies, and knowledge spillovers. We would like to thank Geert Ridder, Alfred Kleinknecht and two anonymous reviewers for their valuable comments and discussion.     

Firm Size and Market Power in Carbonated Soft Drinks

Sutton (1998) offers us a simple way to model firm size distributions across differentiated products industries. We analyse the implications of this approach for company markups using a structural model for a specific industry. We incorporate the complexities of multi-product (brand) companies operating with different (strategic) configurations of product characteristics and stores to estimate brand markups, using Irish AC Nielsen retail data for Carbonated Soft Drinks. As a second step we estimate that market power does not increase in companies with higher market share, controlling for other factors. This challenges a traditional mind-set.     

Staatsexploitatie van Spoorwegen?

Onuitgesproken rede in de vergadering der Vereeniging voor de Staathuishoudkunde en de Statistiek van 30 September 1899.     

Patenting activity and elements of market structure in the Dutch manufacturing industry

Summary On the basis of econometric analysis this survey shows how patent intensity (number of patents in relation to sales) is positively influenced by technological opportunity and expected profit, and negatively by industry size and concentration. In addition, it is investigated whether patents can be used as a proxy for both inventive and innovative activity. To this question no definite answer could be given. A contradictory relationship was found between the R&D/sales ratio and the patents/sales ratio, which in this case merely shows how research based on firm data and industry data can come up with very different results. A general implication is that for studies on the Dutch manufacturing industry the aggregation from firm level to industry level should be treated with caution.The author works for Corporate Development & Economics Department of Unilever N.V. The views expressed in this article do not necessarily coincide with those of my employer.This article is based on the dissertation that I wrote for the MA in Economics programme at the University of East Anglia (UK). I would like to thank Dr S. Davies, Dr B. Lyons, and G. Hockley Morley for their useful comments, Vanda Morgan for her help with the language and Eline Rossen for her help in finalising this paper. Any errors are mine.     

The economics of land fragmentation in the north of Vietnam*

Land fragmentation, where a single farm has a number of parcels of land, is a common feature of agriculture in many countries, especially in developing countries. In Vietnam, land fragmentation is common, especially in the north. For the whole country, there are about 75 million parcels of land, an average of seven to eight plots per farm household. Such fragmentation can be seen to have negative and positive benefits for farm households and the community generally. Comparative statics analysis and analysis of survey data have led to the conclusion that small‐sized farms are likely to be more fragmented, and that fragmentation had a negative impact on crop productivity and increased family labour use and other money expenses. Policies which allow the appropriate opportunity cost of labour to be reflected at the farm level may provide appropriate incentives to trigger farm size change and land consolidation. Policies which tip the benefits in favour of fewer and larger plots, such as strong and effective research and development, an active extension system and strong administrative management, may also lead to land consolidation.     

Determinants of Government Aid to Katrina Survivors: Evidence from Survey Data

We analyze survey data from Mississippi coastal communities where Katrina made its final landfall. Logistic regressions indicate that government aid is helpful in dealing with one- to two-month economic disruption and long-term rebuilding but is less helpful with regard to short-term rebuilding and mitigating longer-term disruption. Our analysis (including a basic risk assessment) finds evidence that individuals receiving government aid and/or having a disability predisaster are likely to incur severe economic hardship postdisaster and that individuals with greater predisaster economic and/or social network capital seem to be less at risk. Our results underscore the importance of housing in the resumption of basic economic activity.     

The Information Contents of Aggregated Money Demand in the EMU

Estimates of aggregated and disaggregated demand-for-money functions in 7 EMU member states show that the aggregated function slightly outperforms the disaggregated functions in explaining the European demand for M3. The aggregated function appears to contain some additional information on money demand in The Netherlands and, to a lesser extent, in France. For the other countries investigated in this study information on aggregated European money demand does not add much to the explanation of demand for money in the individual countries.