The EU State aid policy for broadband: An evaluation of the Italian experience with first generation networks

State aid (SA) measures for broadband have been flourishing in the EU, but our knowledge about the effectiveness and efficiency of this policy remains extremely scarce. We investigate the SA experience with the first generation of broadband services (FGB) in Italy, whose market was long plagued by extensive market failures, largely due to market power. By exploiting original open Government data and sources, we analyse the main domains of the EU SA policy, and assess whether its ex ante goals have been met in Italy. Four main results stand out. First, the plan extended the FGB coverage of rural areas, although with a substantial delay and incompletely, with respect to the ambitious targets of the Digital Agenda for Europe. Second, public consultations have significantly increased the transparency of the market and of the SA intervention, promoting investment and a gradual increase in the efficiency of public procurement. Third, the direct effects of SA on competitive entry appear less pronounced, at least in the static sense. Fourth, the final matching between allocative and dynamic efficiency of SA policy, and its coherence with industrial and innovation policies remain critical, based on the Italian experience: in fact, the persisting digital divide affecting the business-rich areas depicts another relevant instance of partial Government failure.     

An empirical analysis of the influence of macroeconomic determinants on World tourism demand

This paper considers three econometric models to determine the relationship between macroeconomic variables and tourism demand. Tourism demand is measured by the inbound visitor's population and also by on-the-ground expenditures. The database is an unbalanced panel of 218 countries over the period 1995–2012. There is evidence that an increase in the World's GDP per capita, a depreciation of the national currency, and a decline of relative domestic prices do help boost tourism demand. The World's GDP per capita is more important when explaining arrivals, but relative prices become more important when we use expenditures as the proxy for tourism demand. We cannot reject the hypothesis of a relative prices unitary elasticity of expenditures. Additionally, we have partitioned our data by income level and by Continent. Results are robust in the first partition, but less robust in the second, although the main conclusions still hold. Finally, we draw policy implications from our findings.     

ENTRY AND IMPORT QUOTA

An import quota set stricter than the free trade level is quite common for the domestic entry protection. However, this paper shows that as the products are vertically differentiated, an import quota that is simply set at the original free trade level could be effective on entrant protection. This quota policy also improves both consumer surplus and total domestic welfare, which is in sharp contrast to the implications of existing literature. Our result suggests that an import quota has a stronger protection effect on domestic production if the domestic and foreign products are vertically differentiated.     

ENDOGENOUS FLEXIBILITY IN THE FLEXIBLE MANUFACTURING SYSTEM

We investigate the flexible manufacturing system (FMS) by using the spatial price discrimination framework of Pal. The degree of flexibility when producing variants can be increased by increasing the investment or production cost and is endogenously determined. Our result is that private incentives for increasing flexibility are excessive from a social welfare perspective.     

The U.S. Airways Group: A post-merger analysis

America West Airlines acquired the bankrupt US Airways on September 27, 2005 to form the US Airways Group, improving its competitive position in the US airline industry. This paper analyzes the post-merger performance of the US Airways Group using airline operating metrics and financial ratios for the period 2005 to 2013. While the airline has still a long way to go to improve its leverage and liquidity ratios, its capital structure and ability to pay its obligations have improved since 2005. Moreover, although the airline is still inefficient in utilizing its assets, the efficiency improvements achieved since the merger have resulted in profits and positive returns to investors. Its share prices have also largely outperformed the S&P 500 and the XAL since the merger, an indication that investors are pleased with how the merger is developing over time. In view of the US Airways Group's improving financial and operating performance, the merger is, essentially, a success.     

The Age of the Dragon: The Effect of Imports from China on Firm‐Level Prices

We analyze the impact of increased import penetration from China on the dynamics of firm‐level output prices in Italy. Accounting for potential endogeneity biases we find a significant and negative causal relationship: a 0.1 percentage point higher Chinese import penetration restrains price growth by 0.17 percentage points per year. This relationship reflects a procompetitive effect induced by cheaper imports, and, thanks to the firm‐level dimension of our data, we show that it is driven by low‐productivity firms within less skill‐intensive sectors. Finally, we show that Chinese import competition also had a dampening effect on Italian overall inflation.     

Bank Panics,Government Guarantees,and the Long‐Run Size of the Financial Sector: Evidence from Free‐Banking America

Governments attempt to increase the confidence of financial market participants by making implicit or explicit guarantees of uncertain credibility. Confidence in these guarantees presumably alters the size of the financial sector, but observing the long‐run consequences of failed guarantees is difficult. We look to America's free‐banking era and compare the consequences of a broken guarantee during the Indiana‐centered Panic of 1854 to the Panic of 1857 in which guarantees were honored. Our estimates of a model of endogenous market structure indicate substantial negative long‐run consequences to financial depth when panics cast doubt upon a government's ability to honor its guarantees.       

China׳s secondary privatization: Perspectives from the Split-Share Structure Reform

The Split-Share Structure Reform granted legitimate trading rights to the state-owned shares of listed state-owned enterprises (SOEs), opening up the gate to China?s secondary privatization. The expectation of privatization quickly boosted SOE output, profits, and employment, but did not change their operating efficiency and corporate governance. The improvements to SOE performance are positively correlated to government agents’ privatization-led incentive of increasing state-owned share value. In terms of privatization methodology, the reform adopted a market mechanism that played an effective information discovery role in aligning the interests of the government and public investors.