Delegating management to experts

Owners of property and assets frequently delegate decisions about operating and maintaining their property to managers who are better informed about local market conditions. We analyze how owners optimally contract with managers who vary in their expertise at prescribing service. We show that the most expert managers offer the greatest variation in operating recommendations. Owners benefit from dealing with experts provided they contract sequentially, whereby terms are negotiated gradually as the manager acquires information.     

“Mr Keynes and the ‘Classics’” Again: A Methodological Enquiry

Keynes is usually interpreted as proposing, or intending to propose an original theory of employment and income. However, this paper shows that Keynes was actually proposing more than a theoretical alternative. He saw himself breaking away from the ‘Classics’ at the connected levels of theory and methodology. This paper thus argues that modern economists going back to the old story of the relation between Mr. Keynes and the ‘Classics’ can learn something about several controversial issues in macroeconomics and methodology like for instance the role of experiments and formal arguments in economics.The paper is the development of a chapter in my Ph.D. thesis and has greatly benefited from discussion with Mark Blaug, Anna Carabelli, Bill Gerrard, Marc Lavoie, Tony Lawson, Roy Rotheim, and especially Geoff Harcourt and Malcolm Sawyer. Errors and omissions are, of course, solely my responsibility. A first draft of the paper was presented at the UK Autumn HET Conference (Glasgow Caledonian University, September 1999) and the AISPE Conference (University of Florence, September 1999). Finally, the paper was completed when I was visiting Research Professor at the Economics Department and C-FEPS, University of Missouri Kansas City (UMKC), Kansas City (USA) and Visiting Fellow at Clare Hall College and CCEPP, University of Cambridge, Cambridge (UK). I would like to express appreciation to members of those institutions for providing a stimulating and pleasant working environment.     

City versus Metropolis: The Northern League in the Milan Metropolitan Area

Entire metropolitan areas are often seen as fundamental components of the emerging global space–economy. The national and global roles of central cities, however, may lead them in fundamentally different economic and political directions from their hinterlands if the functions of the cities are decreasingly complementary to those of their surrounding areas. In particular, the political complexions of city and hinterland may come to reflect different cultural and economic orientations as a result of divergence in political–economic trajectories between the two. This possibility is explored using the example of the northern Italian city of Milan and its hinterland, taken as the provinces of Bergamo, Como, Lecco and Varese, and the rest of the province of Milan outside of the city with respect to geographical patterns of support for the regionalist/separatist movement, the Northern League, over the course of three national elections: 1992, 1994 and 1996. Putatively a movement representing the interests of northern Italy as a whole, the Northern League’s stands on issues tended increasingly to represent the identities and interests of the small manufacturing firms that dominate part of the fringe of the metropolitan area, whereas Milan itself has an economic base of advanced services and national–oriented manufacturing firms that would lead to the expectation of a very different political orientation. Analysis of election returns suggests a divergence between city and hinterland that is in large part accounted for by their distinctive economic trajectories. There is no simple identity between a city and its metropolis. On considère souvent des zones métropolitaines entières comme des composantes fondamentales de l’espace économique mondial naissant. Les rôles nationaux et planétaires des grandes villes centrales peuvent toutefois les pousser dans des directions économiques et politiques totalement différentes de leur arrière–pays si leur fonction perd de sa complémentarité par rapport à leur zone environnante. Les aspects politiques de la ville et de l’arrière–pays peuvent notamment finir par traduire des orientations économiques et culturelles distinctes è la suite d’une divergence dans leurs trajectoires politico–économiques respectives. Cette possibilité est étudiée au travers de l’exemple de Milan, ville du nord de l’Italie, et de son arrière–pays (couvrant les provinces de Bergame, Côme, Lecco, Varèse et le reste de la province de Milan extérieur à la ville) en s’attachant à la carte géographique des partisans du mouvement régionaliste et séparatiste de la Ligue du Nord au cours de trois élections nationales (1992, 1994 et 1996). Ce mouvement, supposé traduire les intérÁts de toute l’Italie du Nord, a penché de plus en plus souvent pour des positions représentant les identités et intérÁts des petites industries qui dominent partiellement la périphérie de la zone métropolitaine, alors que la base économique de Milan se compose de services de pointe et d’entreprises industrielles d’envergure nationale laissant supposer une orientation politique toute différente. Une analyse des résultats des élections révèle une divergence entre ville et arrière–pays, en grande partie justifiée par leurs axes économiques distincts. Il n’existe pas d’identité simple entre une ville et sa métropole.     

Can price regulation increase cost-efficiency?

This paper examines the possibility that price regulation increases a monopolist's cost-efficiency. When the firm's choice of cost-reducing effort depends on the output supplied, a binding price-cap, by compelling the monopolist to produce more, results in lower costs. On the basis of a two-period asymmetric information model, the paper demonstrates that price regulation increases efficiency when the elasticity of demand is sufficiently low, even assuming very conservative preferences of the regulator and asymmetric information. Moreover, contrary to previous findings and conventional wisdom, we find that a periodical rate base review may increase productive efficiency through the positive effect on future cost-reducing effort, counterbalancing its well known adverse effect on the current level of effort.     

Public engagement through social media: the spending review experience

This paper, relying on three empirical cases of spending reviews carried out in Europe, investigates how social media has been used to engage citizens in spending review processes. The authors explain the differences in levels of engagement between the use of social media (Web 2.0 tools) compared to traditional Web 1.0 tools. Finally, they discuss how government might genuinely listen to its citizens and work with them.     

A class of spatial econometric methods in the empirical analysis of clusters of firms in the space

In this paper we aim at identifying stylized facts in order to suggest adequate models for the co-agglomeration of industries in space. We describe a class of spatial statistical methods for the empirical analysis of spatial clusters. The main innovation of the paper consists in considering clustering for bivariate (rather than univariate) distributions. This allows uncovering co-agglomeration and repulsion phenomena between the different sectors. Furthermore we present empirical evidence on the pair-wise intra-sectoral spatial distribution of patents in Italy in 1990s. We identify some distinctive joint patterns of location between different sectors and we propose some possible economic interpretations. A previous version of this paper was presented at the Workshop on Spatial Econometrics and Statistics, held in Rome 25–27 May 2006. We wish to thank the participants for the useful comments received. The comments received by two anonymous referees are also gratefully acknowledged. They improved substantially the quality of our work.     

Interregional Migration of Human Capital and Unemployment Dynamics: Evidence from Italian Provinces

Since the mid‐1990s interregional migration flows in Italy have dramatically increased, especially from the South to the North. These flows are characterized by a strong component of human capital, involving a large number of workers with secondary and tertiary education. Using longitudinal data for the period 2002–2011 at NUTS‐3 territorial level, we document that long‐distance (i.e., South‐North) net migration of high‐skill workers has increased the unemployment at origin and decreased it at destination, thus deepening North–South unemployment disparities. On the other hand, long‐distance net migration of low‐skill workers has had the opposite effect, by lowering the unemployment at origin and raising it at destination. Further evidence also suggests that the diverging effect of high‐skill migration dominates the converging effect of low‐skill migration. Thus, concerns for an ‘internal brain drain’ from Southern regions look not groundless.