From the beginning, the debate on the likely results of the proposed acquisition of T-Mobile USA by AT&T focused more on the claims of the parties that “immense” merger efficiencies would overwhelm any apparent losses of competition than on the presence or absence of those losses, and the factors that might affect them, such as market definition. The companies based their “economic model” of the merger on estimates of efficiencies on AT&T’s “engineering model”, without addressing the credibility of the results of the latter in the context of the economics literature on the telecommunications sector. In this paper we first argue that the economics literature on economies of scale (especially) and economies of density in mobile telephony suggests caution in expecting such massive cost reductions from increasing the size of an already very large firm. We then present new econometric evidence from an international data base supporting the notion that most large mobile telephone service providers have reached the point of constant or even (rarely) declining returns to scale.
{"title":"The Proposed Merger of AT&T and T-Mobile: Are There Unexhausted Scale Economies in U.S. Mobile Telephony?","authors":"Yan Li, R. Pittman","doi":"10.2139/ssrn.2046129","DOIUrl":"https://doi.org/10.2139/ssrn.2046129","url":null,"abstract":"From the beginning, the debate on the likely results of the proposed acquisition of T-Mobile USA by AT&T focused more on the claims of the parties that “immense” merger efficiencies would overwhelm any apparent losses of competition than on the presence or absence of those losses, and the factors that might affect them, such as market definition. The companies based their “economic model” of the merger on estimates of efficiencies on AT&T’s “engineering model”, without addressing the credibility of the results of the latter in the context of the economics literature on the telecommunications sector. In this paper we first argue that the economics literature on economies of scale (especially) and economies of density in mobile telephony suggests caution in expecting such massive cost reductions from increasing the size of an already very large firm. We then present new econometric evidence from an international data base supporting the notion that most large mobile telephone service providers have reached the point of constant or even (rarely) declining returns to scale.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129717318","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}
In this paper we analyze the evolution of firm efficiency in the Czech Republic. Using a large panel of more than 190,000 Czech firm/years we study whether firms fully utilize their resources, how firm efficiency evolves over time, and how firm efficiency is determined by ownership structure. We employ a panel version of a stochastic production frontier model for the period 1996–2007 with time-varying efficiency. We differentiate among various degrees of ownership concentration and domestic or foreign origin. In a two-stage set-up we first estimate the degree of firm inefficiency and then the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis that concentrated ownership is positively related to efficiency. FDI has beneficial effects at the microeconomic level. However, we show that a simple majority is not necessarily the best structure to improve efficiency. We further analyze the effects of ownership coalitions and shed light on many other subtleties of how ownership and the specific industry affect firm efficiency.
{"title":"Firm Efficiency: Domestic Owners, Coalitions, and FDI","authors":"J. Hanousek, E. Kočenda, Michael P Masika","doi":"10.2139/ssrn.2046939","DOIUrl":"https://doi.org/10.2139/ssrn.2046939","url":null,"abstract":"In this paper we analyze the evolution of firm efficiency in the Czech Republic. Using a large panel of more than 190,000 Czech firm/years we study whether firms fully utilize their resources, how firm efficiency evolves over time, and how firm efficiency is determined by ownership structure. We employ a panel version of a stochastic production frontier model for the period 1996–2007 with time-varying efficiency. We differentiate among various degrees of ownership concentration and domestic or foreign origin. In a two-stage set-up we first estimate the degree of firm inefficiency and then the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis that concentrated ownership is positively related to efficiency. FDI has beneficial effects at the microeconomic level. However, we show that a simple majority is not necessarily the best structure to improve efficiency. We further analyze the effects of ownership coalitions and shed light on many other subtleties of how ownership and the specific industry affect firm efficiency.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128767675","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}
Based on a large panel of Czech manufacturing firms, we estimate firm-level production functions in 2003-2007 using the Levinsohn and Petrin (2003) and Wooldridge (2009) approaches, correcting for the measurement error in capital. We show that measurement error plays a significant role in the size of the estimated capital coefficient. The capital coefficient estimate approximately doubles (depending on the particular industry) when we control for capital measurement error. Consequently, while the majority of industries exhibit constant or (in)significantly decreasing returns to scale when the standard methods are used, increasing returns cannot be rejected in some industries when the estimation is corrected for capital measurement error.
{"title":"The Impact of Capital Measurement Error Correction on Firm-Level Production Function Estimation","authors":"Lubomír Lízal, Kamil Galuščák","doi":"10.2139/ssrn.1993285","DOIUrl":"https://doi.org/10.2139/ssrn.1993285","url":null,"abstract":"Based on a large panel of Czech manufacturing firms, we estimate firm-level production functions in 2003-2007 using the Levinsohn and Petrin (2003) and Wooldridge (2009) approaches, correcting for the measurement error in capital. We show that measurement error plays a significant role in the size of the estimated capital coefficient. The capital coefficient estimate approximately doubles (depending on the particular industry) when we control for capital measurement error. Consequently, while the majority of industries exhibit constant or (in)significantly decreasing returns to scale when the standard methods are used, increasing returns cannot be rejected in some industries when the estimation is corrected for capital measurement error.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121377945","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 the effect of corporate diversification on the pricing of bank-loan contracts. We find that diversified firms have significantly lower loan rates than comparable focused firms, and we find no evidence that diversified firms are subject to more restrictive non-price contract terms pertaining to maturity, collateral requirements, and covenant restrictions. We show that the effect of diversification on the cost of a bank loan is channeled primarily through coinsurance in investment opportunities and cash flows and that the effect is nonlinear: as the extent of corporate diversification grows, the cost-reduction benefit of diversification decreases. Our results indicate that the organizational structure of the firm can alleviate its external financing constraints and that it has an important bearing on the firm’s financing capacity.
{"title":"Bank Loan Contracting and Corporate Diversification: Does Organizational Structure Matter to Lenders?","authors":"V. Aivazian, Jiaping Qiu, Mohammad M. Rahaman","doi":"10.2139/ssrn.1623427","DOIUrl":"https://doi.org/10.2139/ssrn.1623427","url":null,"abstract":"This paper investigates the effect of corporate diversification on the pricing of bank-loan contracts. We find that diversified firms have significantly lower loan rates than comparable focused firms, and we find no evidence that diversified firms are subject to more restrictive non-price contract terms pertaining to maturity, collateral requirements, and covenant restrictions. We show that the effect of diversification on the cost of a bank loan is channeled primarily through coinsurance in investment opportunities and cash flows and that the effect is nonlinear: as the extent of corporate diversification grows, the cost-reduction benefit of diversification decreases. Our results indicate that the organizational structure of the firm can alleviate its external financing constraints and that it has an important bearing on the firm’s financing capacity.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128057938","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}
Production networks in East Asia, particularly in the manufacturing and machinery industries, are well recognized as the most advanced in the world, in terms of their magnitude, extensiveness, and sophistication. This paper tries to link various economic studies on related topics, to see how much we understand about production networks in East Asia. After providing a brief overview of international trade statistics, the paper reviews a number of academic papers concerning (i) the structure and mechanics of production networks, (ii) the conditions for production networks, and (iii) the properties and implications thereof.
{"title":"Production Networks in East Asia: What We Know so Far","authors":"F. Kimura, A. Obashi","doi":"10.2139/ssrn.1957947","DOIUrl":"https://doi.org/10.2139/ssrn.1957947","url":null,"abstract":"Production networks in East Asia, particularly in the manufacturing and machinery industries, are well recognized as the most advanced in the world, in terms of their magnitude, extensiveness, and sophistication. This paper tries to link various economic studies on related topics, to see how much we understand about production networks in East Asia. After providing a brief overview of international trade statistics, the paper reviews a number of academic papers concerning (i) the structure and mechanics of production networks, (ii) the conditions for production networks, and (iii) the properties and implications thereof.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122733206","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}
Pub Date : 2011-10-31DOI: 10.1108/S1574-8715(2011)0000011020
Miguel León-Ledesma, P. Mcadam, Alpo Willman
We examine the two-level nested Constant Elasticity of Substitution production function where both capital and labor are disaggregated in two classes. We propose a normalized system estimation method to retrieve estimates of the inter- and intra-class elasticities of substitution and factor augmenting technical progress coefficients. The system is estimated for US data for the 1963-2006 period. Our findings reveal that skilled and unskilled labor classes are gross substitutes, capital structures and equipment are gross complements, and aggregate capital and aggregate labor are gross complements with an elasticity of substitution close to 0.5. We discuss the implications of our findings and methodology for the analysis of the causes of the increase in the skill premium and, by implication, inequality in a growing economy.
{"title":"Aggregation, the Skill Premium, and the Two-Level Production Function","authors":"Miguel León-Ledesma, P. Mcadam, Alpo Willman","doi":"10.1108/S1574-8715(2011)0000011020","DOIUrl":"https://doi.org/10.1108/S1574-8715(2011)0000011020","url":null,"abstract":"We examine the two-level nested Constant Elasticity of Substitution production function where both capital and labor are disaggregated in two classes. We propose a normalized system estimation method to retrieve estimates of the inter- and intra-class elasticities of substitution and factor augmenting technical progress coefficients. The system is estimated for US data for the 1963-2006 period. Our findings reveal that skilled and unskilled labor classes are gross substitutes, capital structures and equipment are gross complements, and aggregate capital and aggregate labor are gross complements with an elasticity of substitution close to 0.5. We discuss the implications of our findings and methodology for the analysis of the causes of the increase in the skill premium and, by implication, inequality in a growing economy.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132752582","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}
Literature on strategic planning puts forward alternative choices that a company can make between standardization and customization of business processes, as suggested by the seminal works of Lampel and Mintzberg (1996) and Gilmore and Pine (1996, 1999). Recent studies reconsider mass customization (Salvador et al., 2009; Logina, 2010) and suggest that a designed mix of standardization/customization may drive alternative business models in the right direction (Sheehan and Vaidyanathan, 2007; Xia and Rajagopalan, 2009; Markides and Oyon, 2010; Berman, 2010).
Lampel and Mintzberg(1996)和Gilmore and Pine(1996, 1999)的开创性著作提出，战略规划的文献提出了公司可以在业务流程的标准化和定制之间做出的替代选择。最近的研究重新考虑了大规模定制(Salvador et al.， 2009;Logina, 2010)，并建议标准化/定制的设计组合可能会推动替代商业模式朝着正确的方向发展(Sheehan和Vaidyanathan, 2007;Xia and Rajagopalan, 2009;Markides and Oyon, 2010;伯曼,2010)。
{"title":"A Business Model Map in the Wealth Management Industry","authors":"Caterina Lucarelli, S. Maggi","doi":"10.2139/ssrn.1926867","DOIUrl":"https://doi.org/10.2139/ssrn.1926867","url":null,"abstract":"Literature on strategic planning puts forward alternative choices that a company can make between standardization and customization of business processes, as suggested by the seminal works of Lampel and Mintzberg (1996) and Gilmore and Pine (1996, 1999). Recent studies reconsider mass customization (Salvador et al., 2009; Logina, 2010) and suggest that a designed mix of standardization/customization may drive alternative business models in the right direction (Sheehan and Vaidyanathan, 2007; Xia and Rajagopalan, 2009; Markides and Oyon, 2010; Berman, 2010).","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"5 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132433008","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}
Though choice of crops is determined largely by agro-climatic factors like soil, temperature and rainfall distribution; farmers are now-a-days increasingly inclined to change the cropping pattern in response to changes in economic, technological, institutional, and policy induced factors. This study attempted to find the farmers choice crops in Tamil Nadu and factors influencing the farmers’ participation in the export markets. Reduction of the efficiency residue (improving the off-farm forces viz., infrastructure, communication and markets) increased the export participation probability of farmers in the sample districts. Farm efficiency, price terms of trade and managerial ability of the farmers were also found to improve the export participation probability of the farmers. Increase in the land size was found not to influence the export participation of the sample farms significantly in all the districts except Salem. This may be attributed to high level crop diversification adopted by the large farm holdings.
{"title":"Managerial Capabilities, Farm Efficiency and Price Signals: Their Influence on Farmers’ Export Participation","authors":"A. Dwivedi, Prahadeeswaran M.","doi":"10.2139/ssrn.1888082","DOIUrl":"https://doi.org/10.2139/ssrn.1888082","url":null,"abstract":"Though choice of crops is determined largely by agro-climatic factors like soil, temperature and rainfall distribution; farmers are now-a-days increasingly inclined to change the cropping pattern in response to changes in economic, technological, institutional, and policy induced factors. This study attempted to find the farmers choice crops in Tamil Nadu and factors influencing the farmers’ participation in the export markets. Reduction of the efficiency residue (improving the off-farm forces viz., infrastructure, communication and markets) increased the export participation probability of farmers in the sample districts. Farm efficiency, price terms of trade and managerial ability of the farmers were also found to improve the export participation probability of the farmers. Increase in the land size was found not to influence the export participation of the sample farms significantly in all the districts except Salem. This may be attributed to high level crop diversification adopted by the large farm holdings.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"49 5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129267349","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}
Pub Date : 2011-07-01DOI: 10.5089/9781455298730.001
A. Virmani, D. Hashim
Most estimates of Indian manufacturing productivity find a slowdown in the 1990s. This has puzzled analysts, given that 1990s reforms were deeper and wider than the 1980s reforms that raised the growth rate of the Indian economy by 2 per cent points. This paper tests the hypothesis of the J curve of Productivity and Growth following major liberalization and finds it to be broadly supported by the data: Technological obsolescence, gradual adoption of new technology and learning by doing result in negative effects on measured productivity.
{"title":"J-Curve of Productivity and Growth: Indian Manufacturing Post-Liberalization","authors":"A. Virmani, D. Hashim","doi":"10.5089/9781455298730.001","DOIUrl":"https://doi.org/10.5089/9781455298730.001","url":null,"abstract":"Most estimates of Indian manufacturing productivity find a slowdown in the 1990s. This has puzzled analysts, given that 1990s reforms were deeper and wider than the 1980s reforms that raised the growth rate of the Indian economy by 2 per cent points. This paper tests the hypothesis of the J curve of Productivity and Growth following major liberalization and finds it to be broadly supported by the data: Technological obsolescence, gradual adoption of new technology and learning by doing result in negative effects on measured productivity.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116789869","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}
Pub Date : 2011-07-01DOI: 10.1111/j.1467-9701.2011.01369.x
D. Brooks, Benno Ferrarini
This study calculates the decline in costs involving merchandise trade between the People’s Republic of China (PRC) and India during the period 1980-2008. Drawing from the recent literature, a comprehensive measure of trade costs is derived from a theory-founded gravity model of international trade, which can be computed based on the observed bilateral trade flows and GDP data. The analysis reveals that trade costs have declined sharply since the 1980s, accounting for a large and increasing portion of growth in total trade between the two countries. Whereas the reduction in trade costs accounted for less than one-third of the increase in trade between PRC and India during the 1980s, lower costs seem to explain about three‐quarters of trade expansion during the 1990s and up to nearly 85 per cent in 2001-08.
{"title":"Asia’s Melting Trade Costs","authors":"D. Brooks, Benno Ferrarini","doi":"10.1111/j.1467-9701.2011.01369.x","DOIUrl":"https://doi.org/10.1111/j.1467-9701.2011.01369.x","url":null,"abstract":"This study calculates the decline in costs involving merchandise trade between the People’s Republic of China (PRC) and India during the period 1980-2008. Drawing from the recent literature, a comprehensive measure of trade costs is derived from a theory-founded gravity model of international trade, which can be computed based on the observed bilateral trade flows and GDP data. The analysis reveals that trade costs have declined sharply since the 1980s, accounting for a large and increasing portion of growth in total trade between the two countries. Whereas the reduction in trade costs accounted for less than one-third of the increase in trade between PRC and India during the 1980s, lower costs seem to explain about three‐quarters of trade expansion during the 1990s and up to nearly 85 per cent in 2001-08.","PeriodicalId":237187,"journal":{"name":"ERN: Production; Cost; Capital & Total Factor Productivity; Value Theory (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123178401","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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