Virtual forms for the organization of production: A comparative analysis

In the present competitive environment, excellence in each phase of the productive process and flexibility are critical requirements in every business. Virtual enterprises have been proposed as an inter-organizational model characterized by both strong incentives to suppliers’ performance and high flexibility. Nonetheless, virtual enterprises are not ubiquitous as some suggest they should be. This paper compares virtual enterprises with other models for the organization of production: Markets, vertically integrated firms and networks. We formulate hypotheses that virtual enterprises are suitable for firms producing complex, modular products, with frequent changes in components, but low knowledge specificity. Virtual enterprises are suitable for a group of industries that is limited, but of growing importance.     

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     

A note on the decomposition (at a point) of aggregate excess demand on the Grassmannian

This paper analyzes the properties of aggregate excess demand functions for economies with an arbitrary finite set of N commodities where agents face trading restrictions of a general, abstract form: their budget set is defined by K-dimensional planes in ^N. It is shown that, if there are at least K agents in the economy, the only general property satisfied by the value of aggregate excess demand and its derivative, at any arbitrary point, is Walras Law. The result is established by considering an economy where agents' preferences are of a ‘generalized Leontief' type.     

Termination clauses in partnerships

We show that when designing a partnership agreement partner firms may prefer not to specify how to allocate the commonly owned assets should there be an early termination of the contract. By not including such a clause, firms induce litigation before a Court with positive probability. Firms create this ex-post inefficiency in order to increase the levels of non-contractible investments, i.e. increase the ex-ante efficiency. The absence of an asset allocation clause works as a “discipline device” that mitigates the hold-up problem within the partnership. In our set-up, no other contract but that without an asset allocation clause can credibly create an ex-post inefficiency.     

Uncertainty and Learning in Stochastic Macro Models

Limits on information have deep economic impact and affect the conduct of economic policy. In the present paper we explore the effect of substantive uncertainty in a macro model, from both an analytical and methodological point of view. Agents are boundedly rational and make their forecasts according to different techniques and try to learn the values of the various parameters. In this context, a Markov regime switching rule, a VAR system, and recursive least square are considered and compared. As a result, we obtain a model which is mostly keynesian in nature that can be compared with the new neoclassical synthesis models. Simulations are carried out and show the possible appearence of endogenous and persistent fluctuations.     

Growth,unemployment and heterogeneity

The paper analyzes unemployment in a medium-run growth model, where aggregate demand and supply interact, using a top-down approach. The aim of the essay is the study of a nonlinear system where both aggregate demand and supply are endogenous and generate bounded unemployment, followed by a methodological effort direct to identify possible lines of convergence with the agent based models (ABM) approach. This is a by-product of the presence of heterogeneity in the model. Heterogeneity acts through two different channels and operates among class of agents: it comes into the aggregate consumption function where households are assumed employed or unemployed; it changes the learning process of pessimists and optimists. The analysis is carried on through simulations. The resulting system is fairly stable to changes in main structural parameters. On one hand, autonomous demand drives the dynamics of the system, while heterogeneity in the consumption function, due to the presence of unemployment, strengthens the links with supply aspects. On the other hand, both the rate of growth of labor productivity and labor supply are endogenous. Two major results are obtained. First, unemployment allows the so called Harrodian reconciliation between aggregate demand and supply. Second, unemployment remains bounded meaning that the interaction between aggregate demand and supply thwarts instability. These results are in keeping with those obtained by means of a bottom-up approach, typical of ABM. Possible explanations and implications of this convergence are put forward and open the venue to further deepening of complementarities among the two modeling strategies.

     

Spatial co-localisation of firms and entrepreneurial dynamics

In this conceptual paper, I propose an interpretation of business dynamics in terms of the spatial co-localisation of firms—considered as an intelligent cognitive system—in a circumscribed area in order to form clusters of various types. I interpret clustering by adopting the methodology of multi-agent combinatory systems: that is, systems formed by collectivities of agents (firms) in which an internal feedback recombines the micro behaviours of the agents (localisation) in order to produce a macro effect (cluster) which, in turn, modifies the attractiveness of the area and conditions the subsequent localisations. I also present the idea that if a cluster has fitness advantages for new firms, then usually new entrepreneurs are formed within it and the cluster widens, due to the endogenous genesis of new firms.     

The sector bias of skill-biased technical change and the rising skill premium in transition economies

We test the hypothesis that the sector bias of skill biased technical change is important in explaining the rising relative wage of skilled workers in the manufacturing sector in three Central and Eastern European transition countries. The econometric results broadly confirm that the concentration of skill biased technical change in the skill intensive sectors had a significant effect on the skill premium in these transition countries.

Local Sunspot Equilibria Reconsidered

We generalize the usual notion of local sunspot equilibria. We say such equilibria exist around a steady state of an OLG economy whenever stationary sunspot equilibria of arbitrarily close economies exist within any neighborhood of the steady state. Unlike the usual notion, this generalization allows to address the following identification problem: Can an analyst distinguish empirically small fluctuations due to small shocks to the fundamentals from pure expectations-driven fluctuations? We study conditions under which these generalized local sunspot equilibria exist in OLG economies, and show that they may exist around not only indeterminate but also determinate steady states.