Manchester School最新文献

The presence of exogenous global shocks due to the 2007/2008 economic and financial crisis and the current global pandemic crisis are deeply hampering economic operators' overall ability to access credit. Small and medium-sized enterprises and start-ups are most severely affected by credit rationing. This paper investigates whether access to bank loans in the early stage of a start-up's lifecycle is a predictor of a firm's default in a time of economic crisis. We ground our analysis on a firm-level longitudinal data set of Italian new capital companies born from 2004 to 2006. Implementing a discrete-time proportional hazard model we study their likelihood of default up to 2014 after controlling for a consistent number of other firms, industry and innovation related characteristics. The main findings confirm that access to bank loans significantly enhances the resilience of Italian start-ups. By taking into consideration the sectoral degree of innovation where firms operate, we also find that bank financing still exerts a positive influence on firm survival in both less and more innovative industries. However, there is evidence of a stronger positive influence on of long-term debt on the survival of firms operating in low- and medium-low innovative industries.

This paper studies the incentives for, and the welfare effects of, pre-donation in a vertically related industry where two downstream firms that produce a homogenous good jointly bargain, using the generalized Nash rule, with an upstream firm over a linear input price before they engage in Cournot competition. We theoretically show that the downstream industry has no incentive to make any pre-donation and this is irrespective of its bargaining power and also irrespective of whether it is a monopoly or a symmetric or asymmetric duopoly. Also, irrespective of the said structures of the downstream industry, we show computationally that (i) the upstream firm finds to make unilateral pre-donation optimal if and only if its bargaining power is sufficiently small and (ii) its optimal pre-donation (whenever positive) always yields Pareto welfare gains.

We consider a two-period model with strategic inventory and explore the welfare implications of banning input price discrimination. We find that inventory incentive is stronger under input price discrimination. Under uniform pricing, an increase in an inventory of a firm equally lowers the rival's wholesale price. It expands the rival's production, suppresses the firm's output, and weakens the incentive. We also find that the weak incentive leads to higher quantity-weighted average wholesale and retail prices. Therefore, allowing input price discrimination alleviates double marginalization and leads to higher consumer surplus and social welfare.

This study constructs a vertical structure model in which a foreign firm holds upstream partial passive ownership and examines tariff-induced free technology transfer from the firm to its downstream rival. We show that a strategic tariff can induce technology transfer when the share of foreign ownership is large, which always yields higher welfare under both vertical separation and integration, while vertical integration can better induce technology transfer. We also consider an extensive analysis with some variations, such as upstream or downstream competition, downstream passive ownership, government commitments to no-tariff policies, and foreign firm commitments to no-licensing strategies, and discuss policy implications regarding the pro-competitive effect of foreign passive ownership when free technology transfer is involved.

We extend the Regression Discontinuity model to evaluate the procyclicality of employment effect of minimum wage and show that previous estimates may be biased due to failure to account for the local non-employment rate. The results suggest that the positive employment effect of increasing minimum wage is strongly procyclical, that is, is more pronounced in areas with low non-employment rates. Under an assumption that employers have no direct impact around the cut-off point, the results suggest that a higher minimum wage increases labour supply of young workers.

We investigate whether the textual sentiment affects European depositors' behavior in withdrawing their deposits. We construct two textual sentiments able to capture the perceived uncertainty. Our findings suggest that a high frequency of uncertainty and weak modal words in the European Central Bank (ECB) president's monthly speeches leads both households and non-financial corporations to withdraw their bank deposits. We also find that non-financial corporations' deposits are more sensitive than households' deposits to these textual sentiments. These findings suggest that regulators and policymakers could expand the already existing early-warning systems for the banking sector by considering the frequency of uncertainty and weak modal words in the ECB president's speeches.

In this paper, we show that, compared with no network externalities, firms always obtain higher profits and social welfare in the presence of positive network externalities, irrespective of the managerial delegation contracts. Furthermore, we show that whether the owner chooses market share delegation or sales delegation contracts relies on the type and strength of network externalities. If the network externalities are positive and strong enough, sales delegation dominates the market share delegation; otherwise, the owner will choose market share delegation. More importantly, we find that, if the network externalities are positive, the optimal interest rate of a loan commitment decreases with an increase of network externalities, and the firm's delegation behavior will benefit society regardless of the delegation contract types. On the contrary, the optimal interest rate increases with an increase of network externalities, and the firm's delegation behavior will harm social welfare in the presence of negative network externalities.

This article examines the causal impact of schooling on the probability of homeownership using decennial US Census data between 1960 and 2000. This is done by employing an instrumental variable approach that exploits historical changes in state mandatory schooling and child labour laws which affected the educational attainment of individuals with relatively low levels of schooling. Aggregate results suggest that policy-induced increases in schooling at the bottom of the educational distribution have a positive impact on homeownership rates of 1.9 percentage points. Disaggregated results reveal that the impact of education is highest among individuals who are located in the middle and top terciles of the income distribution with no effect of additional education in the lowest tercile. These results add to the growing body of literature which suggests that education may lead to positive outcomes beyond labour market earnings.

This paper re-examines the leverage effect of bundling under vertical quality differentiation. That is, it studies whether or not the firm can still extend its monopoly power from the monopolist product market to the competing product market by bundling under vertical product quality differentiation. There is an intangible product (such as cloud storage, after sale service, etc.) in a bundled package with vertical quality differentiation. The model herein enables us to further analyze the effects of bundling on a competitor's profit, consumer surplus, and social welfare when the bundler is a high- or low-quality firm and is facing a single-product competitor. When the bundling product is a high quality product, bundling reinforces the monopolist's market power toward the monopoly good, which runs opposite from the traditional leverage effect. If bundling enhances (shortens) the quality difference in competing goods, then bundling increases (reduces) both the competitor's profit and social welfare, whereas it decreases (increases) consumer surplus. Contrary to traditional literature, we find that mixed bundling may not be superior to pure bundling and the price discrimination via mixed bundling by the multi-product firm may enhance the consumer surplus.

I highlight interconsumer externalities in a static model of sales with homogeneous products and bidimensional consumer heterogeneity wherein there exists two-type search intensity heterogeneity and two-type valuation heterogeneity. An increase in the percentage of consumers with high valuation creates a dichotomy in the market. The consumers who experience the increase in their valuation become better off; I call these consumers privileged. All other consumers either become worse off or remain unaffected; I call the consumers who become worse off disadvantaged and the consumers who remain unaffected unprivileged. In the environment with privileged and disadvantaged consumers, the net effect on total consumer surplus is ambiguous. These results come in contrast to a dynamic Coasian version of the model in which if the percentage of consumers with high valuation increases, always all consumers become better off. Public policy interventions that target an increase in the welfare of consumers by altering the mix of the population should (i) distinguish between dynamic and static markets; and (ii) take into account under which conditions in static markets the net effect on consumer surplus is positive.