Bennet Woodcroft and the value of English patents, 1617–1841

We examine the potentialities of a new indicator measuring the value of English patents in the period 1617–1841. The indicator is based on the relative visibility of each individual patent in the contemporary technical and legal literature as summarized in Bennet Woodcroft's Reference Index of Patents of Invention. We conclude that the indicator provides a reasonable proxy for the value of patents and that it can be usefully employed to shed light on the timing and scope of innovation during the Industrial Revolution. In particular, our indicator offers a suitable reconciliation between the patent records evidence and the Crafts–Harley view of the Industrial Revolution.     

Brand-specific tastes for quality

This paper develops a model of nonlinear pricing with competition. The novel element is that each consumer's willingness to pay for quality is private information and is allowed to differ across brands. The consumer's preferences are represented by a multidimensional type containing the marginal value of quality for different products. Buyers with high willingness to pay for quality also display strong preferences for particular brands, and require higher discounts in order to switch away from their favorite product. Therefore, competition is fiercer for buyers with lower tastes for quality, and hence more elastic demands. This is in sharp contrast to earlier models in which competition is fiercer for higher-taste, more valuable buyers. In equilibrium, firms either compete intensively for the entire market (providing strictly positive rents to all consumers) or shut down the least profitable segment of the market. Quality levels are distorted downwards for all buyers, except for those with the highest type. The number of competing firms and the degree of correlation across brand preferences enhance the efficiency of the allocation.     

Optimal safety stock levels of subassemblies and manufacturing components

In order to control the time to market and manufacturing costs, companies produce and purchase many parts and components before receiving customer orders. Consequently, demand forecasting is a critical decision process. Using modular product design and super bills of materials are two effective strategies for developing a reliable demand forecasting process. They reduce the probability of stockouts in diversified production contexts. Furthermore, managing and controlling safety stocks for pre-assembled modules provide an effective solution to the problem of minimizing the effects of forecast errors. This paper develops, evaluates, and applies innovative cost-based analytical models so that the optimal safety stock of modular subassemblies and components in assembly to order and manufacturing to order systems, respectively, can be rapidly quantified. The implementation of the proposed models in two industrial case applications demonstrates that they significantly reduce the safety stock inventory levels and the global logistical cost.     

CONTROLLING INFLATION WITH TIMID MONETARY–FISCAL REGIME CHANGES

Can monetary policy control inflation when both monetary and fiscal policies change over time? When monetary policy is active, a long-run fiscal principle entails flexibility in fiscal policy that preserves determinacy even when deviating from passive fiscal, substantially for brief periods or timidly for prolonged periods. In order to guarantee a unique equilibrium, monetary and fiscal policies must coordinate not only within but also across regimes, and not simply on being active or passive, but also on their extent. The amplitude of deviations from the active monetary/passive fiscal benchmark determines whether a regime is Ricardian: Timid deviations do not imply wealth effects.     

Bankruptcy delay and firms’ dynamics

Small Business Economics - The present paper explores the link between bankruptcy law and firms’ dynamics, focusing on Italy as a case study. Relying on a previous literature dealing with the...     

Competition Effects of Supermarket Services

This article investigates the competition effects of supermarket services using fluid milk as a case study. A simultaneous equation model for services and price competition is estimated with scanner data from fifteen supermarket chains using two alternative measures of services, namely store size and principal components of in-store services. Empirical results show that increasing services results in economies of scope, greater supermarket chain-level demand, lower price elasticity of demand, and enhanced market power, leading to higher milk prices and quantity sold. We conclude that, as result of service competition, supermarkets differentiate themselves from competitors and successfully attract less price-sensitive consumers.     

User Charges as Redistributive Devices

In this model, a mix of public and private provision of private goods arises naturally in the economy. We characterize the social optimum in the presence of a linear tax/public expenditure system and show how a user charge can be welfare- or Pareto-improving, when the users are the poor. The charge discourages the rich from opting into the public program and allows the policymaker to restructure the tax/expenditure system in a way that is beneficial for the poor. If the ensuing welfare gain is large enough to outweigh the loss for the remaining users, a charge is desirable.     

Assessing the Determinants of High-Growth Manufacturing Firms in Italy

Few firms grow rapidly, but their contribution to employment growth is often impressive. The main purpose of this paper is to analyse both the external and internal factors that can affect the probability of being a high-growth firm (HGF) in Italy. We found that HGFs are, on average, young firms and are present in different industries, but the role of demand is important to understanding their performance at the sectoral level. Moreover, our findings show that financial constraints and profitability are not associated with the probability of being a HGF. HGFs, on average, are characterised by high productivity, but only when growth is measured in terms of sales. The most original results of this study concern the endogenous determinants of rapid growth, which have yet to be adequately examined in the literature. First, we found that the concentration of ownership is important for HGFs that experienced rapid growth in their sales. Second, the quality of human capital is a strong point for firms experiencing rapid employment growth.     

Differentiating Indexation in Dutch Pension Funds

Funded social security programs are particularly vulnerable to economic and financial market shocks. As a consequence of the recent crisis, a large fraction of the Dutch pension funds had to submit restoration plans for the recovery of their buffers. Such plans will have to rely primarily on a mix of reduced benefit indexation and increased pension contributions. Hence, a discussion has emerged whether indexation should be differentiated across the various groups of participants in a pension fund. We investigate this issue numerically, developing an applied many-generation small open-economy OLG model with heterogeneous agents. The pension system consists of a first-pillar PAYG component and a second pillar with a pension fund. In our stochastic simulations, we hit the economy with a variety of unexpected demographic, economic and financial shocks. We compare uniform indexation of pension rights across all fund participants with alternatives such as status-contingent indexation in which pensions are protected against price inflation. While the aggregate welfare consequences are small, group-specific consequences are more substantial with the workers and future born losing and retirees benefitting from a shift away from uniform indexation. The exception is a scheme which links indexation directly to the fund’s asset performance. Under this scheme the retired benefit without other groups losing. The welfare effects are primarily the result of systematic welfare redistributions rather than of shifts in the benefits of risk sharing. Contribution rates always have to rise substantially from their initial levels to maintain the system’s sustainability. An increase in the retirement age that leaves existing pension rights untouched does little to avoid this rise with its adverse labour market consequences.     

Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries

This paper compares the degree of openness to trade of three developed countries markets—the European Union, Japan, the United States—with that of three middle-income countries, namely Brazil, India, and China. A theoretically consistent protection measure—the Mercantilistic Trade Restrictiveness Index (MTRI)—is employed to average tariffs at different levels of aggregation. The computation relies on a comparative static applied general equilibrium model (Global Trade Analysis Project—GTAP) featuring imperfect competition as well as on the bilateral applied tariffs included in the most recent version of the GTAP database. Results provide a different picture from what could have been expected given the widely publicized diffusion of preferential schemes supposedly favoring developing countries exports. JEL no.  F17, C68, Q17