Empirical Industrial Organization

A survey of the Greek defence industry

by Apostolos Rafailidis

Defence and Peace Economics, vol. 14(4), pp. 311 – 324, Aug. 2003
co-authored with Christos Kollias

Greece yearly allocates a substantial part of its national income to defence and its defence burden is the highest... more Greece yearly allocates a substantial part of its national income to defence and its defence burden is the highest among EU and NATO members. To meet the demand for military hardware it relies almost exclusively on imports, ranking among the largest conventional arms importers in the world. Despite efforts to develop a domestic defence industry, indigenous production only covers a limited proportion of Greece's demand for military equipment. The majority of weapons, including sophisticated and technologically advanced systems, are imported from the major arms producers. This paper critically surveys the Greek defence industrial base, its structure and recent performance, and assesses its future options.

How Can We Study Learning with Geovisual Analytics Applied to Statistics?

by Linnea Stenliden

Published in Future Internet dec 2011, special issue - Geovisual Analytics. Co-authored with Mikeal Jern.

It is vital to understand what kind of processes for learning that Geovisual Analytics creates, as certain activities... more It is vital to understand what kind of processes for learning that Geovisual Analytics creates, as certain activities and conditions are produced when employing Geovisual Anlytic tools in education. To understand learning processes created by Geovisual Analytics, first requires an understanding of the interactions between the technology, the workplace where the learning takes place, and learners’ specific knowledge formation. When studying these types of interaction it demands a most critical consideration from theoretical perspectives on research design and methods. This paper first discusses common, and then a more uncommon, theoretical approach used within the fields of learning with multimedia environments and Geovisual Analytics, the socio-cultural theoretical perspective. The paper next advocates this constructivist theoretical and empirical perspective when studying learning with multiple representational Geovisual Analytic tools. To illustrate, an outline of a study made within this theoretical tradition is offered. The study is conducted in an educational setting where the Open Statistics eXplorer platform is used. Discussion of our study results shows that the socio-cultural perspective has much to offer in terms of what kind of understanding can be reached in conducting this kind of studies. Therefore, we argue that empirical research to analyze how specific communities use various Geovisual Analytics to evaluate information is best positioned in a socio-cultural theoretical perspective.

Keywords: Geovisual Analytics; geovisualization; multiple representations; multimedia learning environment; learning studies; socio-cultural theoretical perspective; empirical methods

Performance and survival of foreign and domestic firms during crises

by Vera Rocha

Master dissertation (Economics) - 2010

The Impact of Mergers on the Degree of Competition in the Banking Industry

by Vittoria Cerasi

Water losses and hydrographical regions influence on the cost structure of the Portuguese water industry

by Fernando Coelho

Journal of Productivity Analysis
Authors: Rita Martins, Fernando Coelho and Adelino Fortunato

Despite the growing research about water utilities, some questions still remain to be solved on the supply side, which... more Despite the growing research about water utilities, some questions still remain to be solved on the supply side, which are frequently absent from empirical studies based on the estimation of cost functions. This paper aims to fill to some extent this gap in the literature by focusing the consequences of water losses reduction and the management of water resources based on their availability at an integrated river basin level. Major findings derived from the estimation of a multiproduct cost function suggest advantages from reducing water losses, given that an adjusted measure of economies of scope, adapting the fact that water lost cannot be sold, reveals that there are small diseconomies of scope. In addition, generally the variables related to the hydrographical regions used have significant effects on water costs. Since the outcomes also reveal the existence of economies of scale, more concentration in the Portuguese water industry at the retail level would be beneficial.

The effect of crises on firm exit and the moderating effect of firm size

by Vera Rocha

Co-authored with Celeste Amorim Varum, published in Economics Letters

The liability of smallness assumption suggests that smaller firms face higher exit risks. However, does it apply... more The liability of smallness assumption suggests that smaller firms face higher exit risks. However, does it apply during crises? We show that during downturns size reduces firms’ exit risk by less. The hazard rate increases more rapidly in size.

Contracting Efficiency and New Firm Survival in Markets Enabled by Information Technology

by Anjana Susarla

Co-authored with Anitesh Barua, published in Information Systems Research

Application service providers (ASP), who host and maintain information technology (IT) applications across the... more Application service providers (ASP), who host and maintain information technology (IT) applications across the Internet, emerged as an innovation in the way IT services are delivered to client firms. In spite of many potential benefits of this model, ASPs experienced business failure and high rates of exit. Drawing on agency theory, we argue that the efficiency of contracting arrangements between ASPs and client organizations is an important determinant of ASP survival. We test this prediction using a unique data set combining multiple sources that allows us to track an ASP from the year of founding through the beginning of 2006. Contractual misalignment, or adopting contracts mismatched with the underlying agency costs, significantly lowers the probability of survival of service providers in the ASP marketplace. The impact of misalignment is particularly severe when coupled with adjustment costs that impede the transition to aligned contracts. To account for potential heterogeneity in ASPs' knowledge of contracting, we test for endogenous self-selection of ASPs in the relationship between contractual misalignment and survival. Our results are robust to a variety of model specifications as well as alternate explanations of survival from multiple theoretical domains.

Measuring Market Conduct in the Brazilian Cement Industry: A Dynamic Econometric Investigation

by Rodrigo Zeidan

Co-authored with Marcelo Resende and published in the Review of Industrial Organization, v. 34, p. 231-244, 2009.

Indirect assessments of market conduct have become widespread in the New Empirical Industrial Organization—NEIO... more Indirect assessments of market conduct have become widespread in the New Empirical Industrial Organization—NEIO literature. Recently, Steen and Salvanes (1999, Int J Ind Organ 17:147–177) provided a flexible dynamic econometric formulation of the approach advanced by Bresnahan (1982, Econ Lett 19:87–92) and Lau (1982, Econ Lett 10:93–99). The present paper considers a similar approach applied to regional cement markets in Brazil under more favorable data availability, and attempts to address part of the concerns that usually emerge with respect to the NEIO literature. In particular, issues pertaining to structural stability and the control for the number of competing firms are addressed. The evidence clearly indicates non-negligible and distinct market power in different regions and also distinct conduct patterns in the short and long run.

Foreign ownership and firm hazard during crises: the moderating role of industry’s technological intensity

by Vera Rocha

Co-authored with Celeste Amorim Varum and Hélder Valente da Silva; published in Empirical Economics Letters, 2010

Despite foreign and domestic firms have been found to differ on survival and exit risks during crises, we believe... more Despite foreign and domestic firms have been found to differ on survival and exit risks during crises, we believe that  other factors may moderate this foreignness effect, as the technological intensity of the industry. The results show that foreign firms operating in more technology-intensive industries face lower hazards during crises, so the resulting competitive advantage may offset the uncertainty inherent in innovative activities. The conclusions are important for policymakers and managers.

Employment and SMEs during crises

by Vera Rocha

Co-authored with Celeste Amorim Varum; published in Small Business Economics, 2011

The persistent increasing duration of unemployment has become an issue during economic crises. Although lay-offs at... more The persistent increasing duration of unemployment has become an issue during economic crises. Although lay-offs at large firms normally make headlines during crises, we still know little about the potential impact of firm size on adjustment behavior in a crisis. We studied effects of firm size on employment growth during economic slowdowns using a rich microeconomic database for the 1988–2007 period in Portuguese manufacturing industry. The results show that economic downturns affect firm growth negatively. This negative effect is found to be higher for larger firms, both during and immediately following crisis periods. Small and medium-sized enterprises (SMEs)
emerge as potential stabilizers in downturn periods. However, larger firms seemto be able to quickly recover from downturn periods. Our results contribute to the scarce literature and to the understanding of the Portuguese case, where many SMEs secure most jobs. These first results may be useful, because SMEs play a determinant role in other European Union economies.

Do foreign and domestic firms behave any different during economic slowdowns?

by Vera Rocha

Co-authored with Celeste Amorim Varum, published in International Business Review, 2011

The global crisis has called to further reflection on the role of multinationals in host economies during crisis. The... more The global crisis has called to further reflection on the role of multinationals in host economies during crisis. The evidence on this matter is scarce and no definite conclusions were achieved. Using panel data analysis, this paper examines the link between foreign ownership, firm employment and turnover growth over 20 years and during economic downturns in particular. We analyse the determinants of firm employment and turnover growth and investigate whether there are significant differences in both variables among domestic and foreign firms when controlling for firm and industry specificities. Additionally we assess if the foreignness effect alters during economic downturns. After controlling for several firm and industry characteristics, we find no significant differences between domestic and foreign firms in what concerns employment growth. However, our results suggest that foreign ownership may affect positively firms’ sales turnover growth during recessions.

Who Offshores, Where, and How? Evidence from the Hard Disk Drive Industry

by Mitsuru Igami

This paper studies firms' decision to start offshore production. I construct a comprehensive panel dataset of 178... more This paper studies firms' decision to start offshore production. I construct a comprehensive panel dataset of 178 firms producing hard disk drives (HDDs) in the world between 1976 and 1998, which records contractual types ("make" or "buy"), destination countries, and the timing of offshoring as well as firms' organizational forms. I find that (1) offshorers, particularly earlier ones, survive better in the long run, (2) firms tend to "make" in the "South" whereas contract manufacturing occurs in the "North," and (3) specialized startups are more inclined to offshore than conglomerates or vertically integrated firms. These heterogeneities are previously unnoticed but likely to shape the course of industry evolution in a broader set of manufacturing sectors.

Does Big Drive Out Small? - Entry, Exit, and Differentiation in the Supermarket Industry

by Mitsuru Igami

This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the... more This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets’ entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These findings highlight the role of store size as an important dimension of product differentiation. Size-based entry regulations would appear to protect big incumbents, at the expense of small incumbents and potential entrants.

Oligopoly in International Commodity Markets: the Case of Coffee Beans

by Mitsuru Igami

This paper studies the impact of international market structure on commodity prices. I used a standard oligopoly model... more This paper studies the impact of international market structure on commodity prices. I used a standard oligopoly model and exploited historical variations in the structure of the international coffee bean market in order to measure how successful a cartel treaty was and to identify its effects on the price of coffee separately from other factors. The results suggest that, of the 75 percent drop in the real coffee price between 1988 and 2001, the cartel's breakdown explains 49 points and the emergence of Vietnam as a major exporter explains another 9 points. I then discuss policy implications for competition, trade, and aid.

Estimating the Innovator's Dilemma: Structural Analysis of Creative Destruction in the Hard Disk Drive Industry

by Mitsuru Igami

Why do incumbent firms innovate more slowly than entrants? This incumbent-entrant timing gap is the key to... more Why do incumbent firms innovate more slowly than entrants? This incumbent-entrant timing gap is the key to understanding the industry dynamics of “creative destruction.” Theories predict cannibalization between existing and new products delays incumbents’ innovation, whereas preemptive motives accelerate it, and incumbents’ cost (dis)advantage would further reinforce these tendencies. To empirically quantify these three forces, I develop and estimate a dynamic oligopoly model using a unique panel dataset of hard disk drive (HDD) manufacturers (1981–98), which I constructed from industry publications. The results suggest that despite strong preemptive motives and a substantial cost advantage over entrants, incumbents are reluctant to innovate early because of cannibalization, which can explain at least 51% of the timing gap. I then discuss managerial implications of the findings, as well as welfare consequences of broad patents, trade barriers, and other competition/innovation policies.