This paper analyzes the efficiency of Italy's local electricity distributors according to two different measurement techniques. Distribution zones belonging to the national monopolist (ENEL) are compared with municipally-owned utilities (MUNIs) which serve individual towns and are usually owned by City Councils (with a few of them currently undergoing privatization). ENEL-MUNI comparisons are displayed subject to a number of caveats, and statistical techniques are used in order to cross-check the results stemming from different methodologies. The paper's main finding is that comparative efficiency analysis failed to spot any systematic efficiency superiority of ENEL's local units over municipal utilities. Overall efficiency comparison outcomes were mixed, thus suggesting that a case-by-case approach should be adopted by Italy's regulatory and governmental authorities when dealing with the territorial reform of electricity distribution. Similarly, any ownership transfers and/or mergers involving ENEL?s units and MUNIs should depend on the varied efficiency records which were detected according to different regional and economic scenarios.
{"title":"Local Electricity Distribution in Italy: Comparative Efficiency Analysis and Methodological Cross-Checking","authors":"G. Scarsi","doi":"10.2139/ssrn.158815","DOIUrl":"https://doi.org/10.2139/ssrn.158815","url":null,"abstract":"This paper analyzes the efficiency of Italy's local electricity distributors according to two different measurement techniques. Distribution zones belonging to the national monopolist (ENEL) are compared with municipally-owned utilities (MUNIs) which serve individual towns and are usually owned by City Councils (with a few of them currently undergoing privatization). ENEL-MUNI comparisons are displayed subject to a number of caveats, and statistical techniques are used in order to cross-check the results stemming from different methodologies. The paper's main finding is that comparative efficiency analysis failed to spot any systematic efficiency superiority of ENEL's local units over municipal utilities. Overall efficiency comparison outcomes were mixed, thus suggesting that a case-by-case approach should be adopted by Italy's regulatory and governmental authorities when dealing with the territorial reform of electricity distribution. Similarly, any ownership transfers and/or mergers involving ENEL?s units and MUNIs should depend on the varied efficiency records which were detected according to different regional and economic scenarios.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125466893","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a high frequency data-set of advertised prices in the personal computer industry, we find that firms which introduced Pentium computers late in the "buy Direct" segment of the market command a higher price premium compared to early entrants. This is true even among firms which have the same price premium for their 486 computers, but is more pronounced for high quality firms. Over time, the difference in the Pentium price premia of the late versus the early entrants decline to levels of the difference in the corresponding 486 price premia. The decline in the relative Pentium price premia contributes to a decline in overall price dispersion, while price dispersion for 486 computers remains constant. These results suggest that late entrants reap short run rents from these consumers that are loyal enough to them to have waited until their entry in order to purchase. They also suggest a rapidly declining price premium for quality over the product cycle. In light of these findings, brand coefficients in hedonistic regressions using high frequency data should not be interpreted as capturing unobserved quality only.
{"title":"Pricing Over the Product Cycle: The Transition from the 486 to the Pentium Processor","authors":"G. Deltas, Eleftherios Zacharias","doi":"10.2139/ssrn.159083","DOIUrl":"https://doi.org/10.2139/ssrn.159083","url":null,"abstract":"Using a high frequency data-set of advertised prices in the personal computer industry, we find that firms which introduced Pentium computers late in the \"buy Direct\" segment of the market command a higher price premium compared to early entrants. This is true even among firms which have the same price premium for their 486 computers, but is more pronounced for high quality firms. Over time, the difference in the Pentium price premia of the late versus the early entrants decline to levels of the difference in the corresponding 486 price premia. The decline in the relative Pentium price premia contributes to a decline in overall price dispersion, while price dispersion for 486 computers remains constant. These results suggest that late entrants reap short run rents from these consumers that are loyal enough to them to have waited until their entry in order to purchase. They also suggest a rapidly declining price premium for quality over the product cycle. In light of these findings, brand coefficients in hedonistic regressions using high frequency data should not be interpreted as capturing unobserved quality only.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122520103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The operations strategy literature has identified four primary dimensions on which a firm competes with another. These are: price, quality, flexibility, and delivery dependability. Of these, quality is perhaps the most critical dimension in terms of the influence a competitive dimension exercises on the competitiveness of a firm. In this paper, we propose a quantitative measure--Quality-Competitiveness Index (QCI)--to determine the degree to which a firm's quality practices and policies are instrumental in improving its competitiveness. The QCI can be effectively employed for benchmarking among competing firms. More importantly, however, the process involved in the determination of a QCI is itself an educative one. It brings weaknesses and strengths of a company with respect to its quality practices and policies to the surfaces with pinpoint accuracy and can, therefore, be usefully employed to improve its quality competitiveness in an effective manner.
{"title":"A Quantitative Approach to Measure Quality-Based Competitiveness of an Organization","authors":"Ashok Kumar, J. Motwani, K. Stecke","doi":"10.2139/ssrn.160263","DOIUrl":"https://doi.org/10.2139/ssrn.160263","url":null,"abstract":"The operations strategy literature has identified four primary dimensions on which a firm competes with another. These are: price, quality, flexibility, and delivery dependability. Of these, quality is perhaps the most critical dimension in terms of the influence a competitive dimension exercises on the competitiveness of a firm. In this paper, we propose a quantitative measure--Quality-Competitiveness Index (QCI)--to determine the degree to which a firm's quality practices and policies are instrumental in improving its competitiveness. The QCI can be effectively employed for benchmarking among competing firms. More importantly, however, the process involved in the determination of a QCI is itself an educative one. It brings weaknesses and strengths of a company with respect to its quality practices and policies to the surfaces with pinpoint accuracy and can, therefore, be usefully employed to improve its quality competitiveness in an effective manner.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131879863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Modern painting began in France during the nineteenth century. Using transactions from art auctions for the work of 50 leading painters who worked in France during the first century of modern art, I estimate the relationship between the value of a painting and the artist's age at the date of its execution. The econometric estimates show that artists born before 1850 - including Manet, C‚zanne, and Degas - typically produced their most valuable work late in their careers, whereas artists born after 1850 - including Picasso, L‚ger, and Braque - were more likely to have done their most valuable work at early ages. Comparison of these results to evidence drawn from art history textbooks furthermore demonstrates that these artists' most valuable work has also been that most highly regarded by scholars. I argue that the change over time in the shape of these artists' age-price profiles was a result of changes in the nature of painting during the late nineteenth century, as painting increasingly became an activity in which innovation was a principal determinant of an artist's importance.
{"title":"The Lives of the Painters of Modern Life: the Careers of Artists in France from Impressionism to Cubism","authors":"David W. Galenson","doi":"10.3386/W6888","DOIUrl":"https://doi.org/10.3386/W6888","url":null,"abstract":"Modern painting began in France during the nineteenth century. Using transactions from art auctions for the work of 50 leading painters who worked in France during the first century of modern art, I estimate the relationship between the value of a painting and the artist's age at the date of its execution. The econometric estimates show that artists born before 1850 - including Manet, C‚zanne, and Degas - typically produced their most valuable work late in their careers, whereas artists born after 1850 - including Picasso, L‚ger, and Braque - were more likely to have done their most valuable work at early ages. Comparison of these results to evidence drawn from art history textbooks furthermore demonstrates that these artists' most valuable work has also been that most highly regarded by scholars. I argue that the change over time in the shape of these artists' age-price profiles was a result of changes in the nature of painting during the late nineteenth century, as painting increasingly became an activity in which innovation was a principal determinant of an artist's importance.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"84 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124976234","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper accounts for quality improvements and adjustment costs in all inputs to U.S. manufacturing production. Adjustment processes for non-capital inputs are slower than previously recognized. Annual adjustment percentages are: labor 77, capital 30, energy 20, and materials 21. Factor prices should be adjusted for quality improvements to reflect higher marginal products. The percentage increases in marginal products from quality improvements are: labor 0.25, capital 0.30, energy 2.13, and materials 0.92. Observed input growth should be adjusted for quality improvements. Unadjusted input growth causes efficiency-based productivity growth rates to exceed observed productivity growth in the slowdown period of 1974 - 1995.
{"title":"Factor Adjustment, Quality Change, and Productivity Growth for U.S. Manufacturing","authors":"J. Bernstein, T. Mamuneas, P. Pashardes","doi":"10.3386/W6877","DOIUrl":"https://doi.org/10.3386/W6877","url":null,"abstract":"This paper accounts for quality improvements and adjustment costs in all inputs to U.S. manufacturing production. Adjustment processes for non-capital inputs are slower than previously recognized. Annual adjustment percentages are: labor 77, capital 30, energy 20, and materials 21. Factor prices should be adjusted for quality improvements to reflect higher marginal products. The percentage increases in marginal products from quality improvements are: labor 0.25, capital 0.30, energy 2.13, and materials 0.92. Observed input growth should be adjusted for quality improvements. Unadjusted input growth causes efficiency-based productivity growth rates to exceed observed productivity growth in the slowdown period of 1974 - 1995.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128471346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates two explanations for why industries might become more productive over time. The first explanation, termed the real productivity case,' is one in which firms become more productive and this leads to more productive industries. The second explanation, termed the rationalization case,' is one in which firm productivity is constant, but productive firms expand while less productive firms either shrink or exit. Each case has very different implications for factor markets, long term growth prospects, and public policy regarding productivity. Further, one can only distinguish between these two cases with plant- or firm-level data. We investigate the empirical relevance of the two cases using the Chilean manufacturing census. We find that the rationalization case explains much of the measured increase in industry productivity. When industry productivity fails, the rationalization case appears much less important. We also contribute to the applied econometric literature on productivity estimation as we show that the value-added production function is especially well-suited to a simple extension of recent methods developed by Oiley and Pakes.
{"title":"When Industries Become More Productive, Do Firms?","authors":"J. Levinsohn, Amil Petrin","doi":"10.3386/W6893","DOIUrl":"https://doi.org/10.3386/W6893","url":null,"abstract":"This paper investigates two explanations for why industries might become more productive over time. The first explanation, termed the real productivity case,' is one in which firms become more productive and this leads to more productive industries. The second explanation, termed the rationalization case,' is one in which firm productivity is constant, but productive firms expand while less productive firms either shrink or exit. Each case has very different implications for factor markets, long term growth prospects, and public policy regarding productivity. Further, one can only distinguish between these two cases with plant- or firm-level data. We investigate the empirical relevance of the two cases using the Chilean manufacturing census. We find that the rationalization case explains much of the measured increase in industry productivity. When industry productivity fails, the rationalization case appears much less important. We also contribute to the applied econometric literature on productivity estimation as we show that the value-added production function is especially well-suited to a simple extension of recent methods developed by Oiley and Pakes.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132710556","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper adds two elements to a standard model of monopolistic competition: First, the number of potential entrants is limited in each period and increases only over time. Second, the potential entrants differ with respect to the consumers' valuation of the variant they could offer. It is shown that the resulting simple model exhibits a rich dynamic structure covering cases like the product life cycle, a path dependent equilibrium and the traditional textbook case of entry. The welfare analysis confirms the view that you can't have too much entry.
{"title":"Sunk Costs, Windows of Profit Opportunities, and the Dynamics of Entry","authors":"G. Götz","doi":"10.2139/ssrn.143028","DOIUrl":"https://doi.org/10.2139/ssrn.143028","url":null,"abstract":"This paper adds two elements to a standard model of monopolistic competition: First, the number of potential entrants is limited in each period and increases only over time. Second, the potential entrants differ with respect to the consumers' valuation of the variant they could offer. It is shown that the resulting simple model exhibits a rich dynamic structure covering cases like the product life cycle, a path dependent equilibrium and the traditional textbook case of entry. The welfare analysis confirms the view that you can't have too much entry.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1998-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122361030","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Restructuring firms in a transition economy produces a sort of network externality, in that the profitability of restructuring depends on the number of firms that already adopted this strategy. We investigate under what conditions a "critical mass" exists, i.e., a situation in which such externality is positive and restructuring spurs imitation, possibly leading to the eventual transformation of the whole economy. We find a critical mass effect when the main effect of restructuring is an increase in value added (i.e., aggregate demand) rather than an increase in the firm's ability to compete against rival home firms. The critical mass case becomes the typical one when competition spurs firms' efficiency.
{"title":"Critical Mass Effect and Restructuring in the Transition Towards a Market Economy","authors":"P. Sacco, C. Scarpa","doi":"10.2139/ssrn.142031","DOIUrl":"https://doi.org/10.2139/ssrn.142031","url":null,"abstract":"Restructuring firms in a transition economy produces a sort of network externality, in that the profitability of restructuring depends on the number of firms that already adopted this strategy. We investigate under what conditions a \"critical mass\" exists, i.e., a situation in which such externality is positive and restructuring spurs imitation, possibly leading to the eventual transformation of the whole economy. We find a critical mass effect when the main effect of restructuring is an increase in value added (i.e., aggregate demand) rather than an increase in the firm's ability to compete against rival home firms. The critical mass case becomes the typical one when competition spurs firms' efficiency.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1998-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131985832","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article investigates how the tying of complementary products can be used to preserve and create monopoly positions. We first show how a monopolist of a product in the current period can use tying to preserve its monopoly in the future. We then show how a monopolist in one market can employ tying to extend its monopoly into a newly emerging market. Our analysis explains how a dominant firm can use tying to remain dominant in an industry undergoing rapid technological change. The analysis focuses on entry costs and network externalities. We also relate our analysis to the Microsoft case.
{"title":"The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries","authors":"D. Carlton, Michael Waldman","doi":"10.2307/3087430","DOIUrl":"https://doi.org/10.2307/3087430","url":null,"abstract":"This article investigates how the tying of complementary products can be used to preserve and create monopoly positions. We first show how a monopolist of a product in the current period can use tying to preserve its monopoly in the future. We then show how a monopolist in one market can employ tying to extend its monopoly into a newly emerging market. Our analysis explains how a dominant firm can use tying to remain dominant in an industry undergoing rapid technological change. The analysis focuses on entry costs and network externalities. We also relate our analysis to the Microsoft case.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1998-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115236736","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the locational determinants of foreign direct investment (FDI) by Japanese manufacturing firms in seven Asian countries by utilizing the 1993 survey data. I show that different size- groups of firms react to different factors in the host country in making the foreign investment decisions. Low labor cost and sufficient infrastructure encourage small firms to invest in a certain country while, for large firms, market size of the host country and strategic considerations (e.g. whether competitors invested in the country or not) are most important for their locational decisions. Overall, availability of cheap labor is not necessarily an important factor for Japanese FDI in Asia.
{"title":"Firm Size and Determinants of Foreign Direct Investment","authors":"Y. Kinoshita","doi":"10.2139/ssrn.154611","DOIUrl":"https://doi.org/10.2139/ssrn.154611","url":null,"abstract":"This paper studies the locational determinants of foreign direct investment (FDI) by Japanese manufacturing firms in seven Asian countries by utilizing the 1993 survey data. I show that different size- groups of firms react to different factors in the host country in making the foreign investment decisions. Low labor cost and sufficient infrastructure encourage small firms to invest in a certain country while, for large firms, market size of the host country and strategic considerations (e.g. whether competitors invested in the country or not) are most important for their locational decisions. Overall, availability of cheap labor is not necessarily an important factor for Japanese FDI in Asia.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1998-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114805612","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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