Industrial organisation

Marcio Cruz, Maurizio Bussolo, Leonardo Iacovone, 01 December 2016

A recent literature has shown that successful firms have in common a deliberate and active management of their internal structure. This column uses an export promotion programme in Brazil that provided consulting on management and production practices to small and medium enterprises to examine whether policies can prompt and support firm reorganisations. It finds that firms participating in the programme were 20% more likely to add a new layer of workers with more specialised skills and competencies.

Hisamitsu Saito, Toshiyuki Matsuura, 25 November 2016

Agglomeration’s impact on product quality has received much less attention than its impact on productivity, despite the importance of quality as a precondition for economic development. This column employs plant-product-level data from Japanese manufacturing to assess the effects of urban agglomeration on product quality. The findings suggest that state and municipal tax breaks, and other public efforts to attract enterprises, enhance economic competitiveness by improving product quality along with productivity.

Philippe Jehiel, Laurent Lamy, 22 November 2016

Bid preferences and set-asides are popular discriminatory practices in US public procurement, but are prohibited in the EU. This column argues that discrimination can be cost-reducing provided it is targeted to favour those firms whose participation is more responsive to the auction procedure. Situations when set-asides may be cost-reducing are also discussed.

Daisuke Fujii, 13 November 2016

Buyer-supplier networks in production processes play an important role in determining the pattern of shock propagations and aggregate fluctuations. This column provides empirical evidence on the structure of production networks and buyer-supplier sales comovements. A strong interdependence of sales growth is confirmed. In general, firms are more affected by their customers than suppliers.  Manufacturing and wholesale sectors exhibit higher propagation factors while retail and service sectors exhibit lower propagation factors. 

Giacinta Cestone, Chiara Fumagalli, Francis Kramarz, Giovanni Pica, 05 November 2016

Diversified business groups and conglomerates have been shown to withstand economic shocks better than equivalent standalone companies. This column uses employment data from France to argue that business groups use internal labour markets to save on termination, search, and training costs, which helps them cope with unexpected changes. These internal markets also provide implicit employment insurance to employees.

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