Abstract: We discuss public procurement instruments for acquiring innovation, focusing on the Eur... more Abstract: We discuss public procurement instruments for acquiring innovation, focusing on the European Pre-commercial Procurement, Procurement of Innovative Solutions and Innovation Partnerships. We analyse in particular how firms’ innovation incentives are affected by: (i) economies of scope and externalities between R&D and large-scale production; (ii) the degree of specificity of the innovation; (iii) the presence of Small and Medium Enterprises (SMEs) in the market and the level of market competition; (iv) the risk of market foreclosure and supplier lock-in. Our study contributes to the literature on incentives in demand-side innovation policy by tapping into the contractual design features and by offering relevant implications for academics and policy makers. (107 words)
Abstract We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsour... more Abstract We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part of the contract before the auction and firms that outsource afterwards. Using a comprehensive dataset on procurement auctions for public works in Valle d’Aosta (Italy), we find that the timing of outsourcing affects the bids and the probability of winning the auction. Specifically, TPs bid closer to the payoff maximizing offer and are more likely to win. Hence, the price paid by the public buyer is lower. These results are supported by a simple theoretical setting showing that, by pre-committing to a TP, suppliers have a lower risk of being “held up” by subcontractors than firms that outsource part of the work after the bidding phase. Our results show the advantage for TPs of freely choosing partners, size and boundaries before the auction, highlighting their potential in fostering the effective participation in public procurement procedures of Small and Medium-sized Enterprises (SMEs).
By exploiting an original 4-year dataset on the Italian retail electricity market, we investigate... more By exploiting an original 4-year dataset on the Italian retail electricity market, we investigate the relationship between firm incumbency — measured by market concentration at the regional level — and consumer inertia — identified by the yearly percentage of consumers switching providers and/or contract, both from the regulated to the free market and within the free market. Our main results show that i) regions recording stronger firm incumbency exhibit larger consumer inertia in leaving the regulated market, this effect being reinforced by the number of active free market retailers; ii) switching by consumers who already are in the free market is, instead, positively affected by firm incumbency. In light of these results, we provide prescriptions for policymakers targeting the migration of consumers towards free-market contracts and, consequently, full energy market liberalisation.
We use the nearest neighbour propensity score matching to link dwellings holding Energy Performan... more We use the nearest neighbour propensity score matching to link dwellings holding Energy Performance Certificates (EPCs) in the Italian province of Treviso with information on the socio-economic characteristics of households most likely to inhabit them. We construct a database of 17,405 dwellings for which information on standardized energy needs is matched to data on (potential) inhabitants and their imputed income, based respectively on census records and survey data. Our analysis shows that EPC registers can be exploited to investigate how income and housing conditions affect fuel poverty and to identify municipal areas with higher fuel poverty risk. Our findings highlight that when designing interventions to reduce fuel poverty, policymakers should target households based not only on their income but also on type of heating fuel, and on efficiency and the size of their accommodation. (135 words) JEL CODE: C21; I32; Q48.
L’acqua e un bene pubblico essenziale in grado di generare una pluralita di domande spesso in con... more L’acqua e un bene pubblico essenziale in grado di generare una pluralita di domande spesso in concorrenza tra loro. Sebbene l’obiettivo di assicurare un accesso alla risorsa non subordinato alla “ability to pay” rimanga uno dei principi cardine dell’offerta, la riforma italiana del servizio idrico – avviata a partire dalla Legge Galli 36/1994 - configura una gestione industriale su larga scala dell’intera filiera di produzione, distribuzione e depurazione dell’acqua potabile, con il duplice scopo di rilanciare gli investimenti nello sviluppo dei servizi e di creare una gestione in grado di “autofinanziarsi” attraverso entrate tariffarie, secondo un principio di full cost recovery. Il metodo tariffario vigente - conosciuto come Metodo Tariffario Normalizzato – incorpora concretamente tali principi; recentemente, tale metodo e stato oggetto di una proposta di revisione da parte del Comitato di Vigilanza sull’Uso delle Risorse Idriche. In questo lavoro viene dapprima presentata una bre...
... Option to Revoke and Regulation of Local Utilities. Michele Moretto and Paola Valbonesi June... more ... Option to Revoke and Regulation of Local Utilities. Michele Moretto and Paola Valbonesi June 2000 ... However, as the termination threat is costly, a stochastic regu0 latory lag may follow over which prices are fixed and its not optimal for the regulator to recall the contract. ...
We present a model of the impact of state aid on equilibrium market structure and on market perfo... more We present a model of the impact of state aid on equilibrium market structure and on market performance in an integrating market when the process of integration is driven by consumer inertia. In a partial equilibrium model, it is an equilibrium for governments to grant state aid, even though this reduces common market welfare.
This Online Appendix contains additional material that complements the paper “Sophisticated Bidde... more This Online Appendix contains additional material that complements the paper “Sophisticated Bidders in Beauty-Contest Auctions”. In particular: Section A and B contain the proofs of Proposition 1 and 2, respectively; Section C presents the results of a simulation exercise that support the theoretical predictions of the Cognitive Hierarchy model; Section D contains additional descriptive and inferential evidence that is discussed in the empirical part of the paper. ∗Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy. Email: stefano.galavotti@unipd.it. †Centre d’Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, 106-112 Bvd de l’Hôpital, 75013 Paris, France. Email: luigi.moretti@univ-paris1.fr. ‡Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy; Higher School of Economics, National Research University, Moscow-Perm, Russia. Email: paola.valbonesi@unipd.it.
The Italian highway industry has undergone an institutional and regulatory reform through the las... more The Italian highway industry has undergone an institutional and regulatory reform through the last decade, characterised by changes in ownership and a new price cap framework. To assess the effect of the reforms on firms’ performance, we use information on all the 20 Italian concessionaires over the 1992-2003 period and 1) estimate the technical progress in the industry, thereby providing a reference value for the X factor in the price cap formula; 2) assess the relative productivity of private vs. public concessionaires; 3) evaluate whether price cap regulation has induced firms to use resources efficiently, 4) determine the possible effect of the inclusion of the quality index in the price cap formula. We find that the introduction of a price cap regime does not increase firms’ productivity whereas a sharp increase in maintenance costs is recorded, arguably due to the quality indicator in the price cap formula. Furthermore, firms appear to have gained from the privatisation proces...
We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part o... more We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part of the contract before the auction and firms that outsource afterwards. Using a comprehensive dataset on procurement auctions for public works in Valle d’Aosta (Italy), we find that the timing of outsourcing affects the bids and the probability of winning the auction. Specifically, TPs bid closer to the payoff maximizing offer and are more likely to win. Hence, the price paid by the public buyer is lower. These results are supported by a simple theoretical setting showing that, by pre-committing to a TP, suppliers have a lower risk of being “held up” by subcontractors than firms that outsource part of the work after the bidding phase. Our results show the advantage for TPs of freely choosing partners, size and boundaries before the auction, highlighting their potential in fostering the effective participation in public procurement procedures of Small and Medium-sized Enterprises (SMEs).
We empirically study the relationship between oil price uncertainty and conflict incidence by usi... more We empirically study the relationship between oil price uncertainty and conflict incidence by using different Vector Auto-Regressive (VAR) models, also augmented with Heterogeneous (VHAR) components. We build two measures for oil price uncertainty and investigate the Middle East and North Africa (MENA) interstate conflict, civil conflict and terrorist attacks data. Our results show that uncertainty in the oil market increases the incidence of conflict in the region. By further decomposing the model for OPEC and non-OPEC members of the region, we find that while the OPEC members immunise themselves against conflict, oil price uncertainty affects the conflict in non-OPEC members positively.
Government support to small business enterprises (SBEs) through set-aside (SA) public procurement... more Government support to small business enterprises (SBEs) through set-aside (SA) public procurement auctions is a common practice. The effect of the SA mechanism is, however, ambiguous. On the one hand, SA auctions can attract more SBEs to compete; on the other hand, SA auctions restrict the entry of—possibly—more cost-efficient large firms. We investigate SA auctions’ effect by exploiting an original Russian database on public procurement e-auctions for granulated sugar (a largely homogeneous good) in the period 2011-2013. To identify the causal effect of SA auctions, we overcome two endogeneity issues: procurers’ choice of SA format and firms’ decision to bid. In an empirical setting where confounding elements are minimized, we found that SA auctions’ effect largely depends on both the reserve price value and the level of competition. We found that there exists an optimal interval for the reserve price where SA auctions record lower procurement prices, as compared to non-SA auctions.
Abstract: We discuss public procurement instruments for acquiring innovation, focusing on the Eur... more Abstract: We discuss public procurement instruments for acquiring innovation, focusing on the European Pre-commercial Procurement, Procurement of Innovative Solutions and Innovation Partnerships. We analyse in particular how firms’ innovation incentives are affected by: (i) economies of scope and externalities between R&D and large-scale production; (ii) the degree of specificity of the innovation; (iii) the presence of Small and Medium Enterprises (SMEs) in the market and the level of market competition; (iv) the risk of market foreclosure and supplier lock-in. Our study contributes to the literature on incentives in demand-side innovation policy by tapping into the contractual design features and by offering relevant implications for academics and policy makers. (107 words)
Abstract We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsour... more Abstract We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part of the contract before the auction and firms that outsource afterwards. Using a comprehensive dataset on procurement auctions for public works in Valle d’Aosta (Italy), we find that the timing of outsourcing affects the bids and the probability of winning the auction. Specifically, TPs bid closer to the payoff maximizing offer and are more likely to win. Hence, the price paid by the public buyer is lower. These results are supported by a simple theoretical setting showing that, by pre-committing to a TP, suppliers have a lower risk of being “held up” by subcontractors than firms that outsource part of the work after the bidding phase. Our results show the advantage for TPs of freely choosing partners, size and boundaries before the auction, highlighting their potential in fostering the effective participation in public procurement procedures of Small and Medium-sized Enterprises (SMEs).
By exploiting an original 4-year dataset on the Italian retail electricity market, we investigate... more By exploiting an original 4-year dataset on the Italian retail electricity market, we investigate the relationship between firm incumbency — measured by market concentration at the regional level — and consumer inertia — identified by the yearly percentage of consumers switching providers and/or contract, both from the regulated to the free market and within the free market. Our main results show that i) regions recording stronger firm incumbency exhibit larger consumer inertia in leaving the regulated market, this effect being reinforced by the number of active free market retailers; ii) switching by consumers who already are in the free market is, instead, positively affected by firm incumbency. In light of these results, we provide prescriptions for policymakers targeting the migration of consumers towards free-market contracts and, consequently, full energy market liberalisation.
We use the nearest neighbour propensity score matching to link dwellings holding Energy Performan... more We use the nearest neighbour propensity score matching to link dwellings holding Energy Performance Certificates (EPCs) in the Italian province of Treviso with information on the socio-economic characteristics of households most likely to inhabit them. We construct a database of 17,405 dwellings for which information on standardized energy needs is matched to data on (potential) inhabitants and their imputed income, based respectively on census records and survey data. Our analysis shows that EPC registers can be exploited to investigate how income and housing conditions affect fuel poverty and to identify municipal areas with higher fuel poverty risk. Our findings highlight that when designing interventions to reduce fuel poverty, policymakers should target households based not only on their income but also on type of heating fuel, and on efficiency and the size of their accommodation. (135 words) JEL CODE: C21; I32; Q48.
L’acqua e un bene pubblico essenziale in grado di generare una pluralita di domande spesso in con... more L’acqua e un bene pubblico essenziale in grado di generare una pluralita di domande spesso in concorrenza tra loro. Sebbene l’obiettivo di assicurare un accesso alla risorsa non subordinato alla “ability to pay” rimanga uno dei principi cardine dell’offerta, la riforma italiana del servizio idrico – avviata a partire dalla Legge Galli 36/1994 - configura una gestione industriale su larga scala dell’intera filiera di produzione, distribuzione e depurazione dell’acqua potabile, con il duplice scopo di rilanciare gli investimenti nello sviluppo dei servizi e di creare una gestione in grado di “autofinanziarsi” attraverso entrate tariffarie, secondo un principio di full cost recovery. Il metodo tariffario vigente - conosciuto come Metodo Tariffario Normalizzato – incorpora concretamente tali principi; recentemente, tale metodo e stato oggetto di una proposta di revisione da parte del Comitato di Vigilanza sull’Uso delle Risorse Idriche. In questo lavoro viene dapprima presentata una bre...
... Option to Revoke and Regulation of Local Utilities. Michele Moretto and Paola Valbonesi June... more ... Option to Revoke and Regulation of Local Utilities. Michele Moretto and Paola Valbonesi June 2000 ... However, as the termination threat is costly, a stochastic regu0 latory lag may follow over which prices are fixed and its not optimal for the regulator to recall the contract. ...
We present a model of the impact of state aid on equilibrium market structure and on market perfo... more We present a model of the impact of state aid on equilibrium market structure and on market performance in an integrating market when the process of integration is driven by consumer inertia. In a partial equilibrium model, it is an equilibrium for governments to grant state aid, even though this reduces common market welfare.
This Online Appendix contains additional material that complements the paper “Sophisticated Bidde... more This Online Appendix contains additional material that complements the paper “Sophisticated Bidders in Beauty-Contest Auctions”. In particular: Section A and B contain the proofs of Proposition 1 and 2, respectively; Section C presents the results of a simulation exercise that support the theoretical predictions of the Cognitive Hierarchy model; Section D contains additional descriptive and inferential evidence that is discussed in the empirical part of the paper. ∗Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy. Email: stefano.galavotti@unipd.it. †Centre d’Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne, 106-112 Bvd de l’Hôpital, 75013 Paris, France. Email: luigi.moretti@univ-paris1.fr. ‡Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy; Higher School of Economics, National Research University, Moscow-Perm, Russia. Email: paola.valbonesi@unipd.it.
The Italian highway industry has undergone an institutional and regulatory reform through the las... more The Italian highway industry has undergone an institutional and regulatory reform through the last decade, characterised by changes in ownership and a new price cap framework. To assess the effect of the reforms on firms’ performance, we use information on all the 20 Italian concessionaires over the 1992-2003 period and 1) estimate the technical progress in the industry, thereby providing a reference value for the X factor in the price cap formula; 2) assess the relative productivity of private vs. public concessionaires; 3) evaluate whether price cap regulation has induced firms to use resources efficiently, 4) determine the possible effect of the inclusion of the quality index in the price cap formula. We find that the introduction of a price cap regime does not increase firms’ productivity whereas a sharp increase in maintenance costs is recorded, arguably due to the quality indicator in the price cap formula. Furthermore, firms appear to have gained from the privatisation proces...
We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part o... more We empirically compare bids (i.e. prices) from temporary partnerships (TPs) that outsource part of the contract before the auction and firms that outsource afterwards. Using a comprehensive dataset on procurement auctions for public works in Valle d’Aosta (Italy), we find that the timing of outsourcing affects the bids and the probability of winning the auction. Specifically, TPs bid closer to the payoff maximizing offer and are more likely to win. Hence, the price paid by the public buyer is lower. These results are supported by a simple theoretical setting showing that, by pre-committing to a TP, suppliers have a lower risk of being “held up” by subcontractors than firms that outsource part of the work after the bidding phase. Our results show the advantage for TPs of freely choosing partners, size and boundaries before the auction, highlighting their potential in fostering the effective participation in public procurement procedures of Small and Medium-sized Enterprises (SMEs).
We empirically study the relationship between oil price uncertainty and conflict incidence by usi... more We empirically study the relationship between oil price uncertainty and conflict incidence by using different Vector Auto-Regressive (VAR) models, also augmented with Heterogeneous (VHAR) components. We build two measures for oil price uncertainty and investigate the Middle East and North Africa (MENA) interstate conflict, civil conflict and terrorist attacks data. Our results show that uncertainty in the oil market increases the incidence of conflict in the region. By further decomposing the model for OPEC and non-OPEC members of the region, we find that while the OPEC members immunise themselves against conflict, oil price uncertainty affects the conflict in non-OPEC members positively.
Government support to small business enterprises (SBEs) through set-aside (SA) public procurement... more Government support to small business enterprises (SBEs) through set-aside (SA) public procurement auctions is a common practice. The effect of the SA mechanism is, however, ambiguous. On the one hand, SA auctions can attract more SBEs to compete; on the other hand, SA auctions restrict the entry of—possibly—more cost-efficient large firms. We investigate SA auctions’ effect by exploiting an original Russian database on public procurement e-auctions for granulated sugar (a largely homogeneous good) in the period 2011-2013. To identify the causal effect of SA auctions, we overcome two endogeneity issues: procurers’ choice of SA format and firms’ decision to bid. In an empirical setting where confounding elements are minimized, we found that SA auctions’ effect largely depends on both the reserve price value and the level of competition. We found that there exists an optimal interval for the reserve price where SA auctions record lower procurement prices, as compared to non-SA auctions.
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