D'Elia, Enrico and Nascia, Leopoldo and Zeli, Alessandro (2011): Analisi dei modelli d’impresa: discontinuità e sviluppo.
Download (1MB) | Preview
Typically, firms change their size through a row of discrete leaps over time. A very basic model allowing for discontinuous growth can be based on a couple of assumptions: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level, and diverging form it is costly; and (b) in the long run, the firm adjusts its size as if the current equipment had to be exploited until overall profits exceed a given threshold and those expected from the new desired plant for the current production level. Combining the latter two hypotheses entails a number of testable consequences, usually regarded as nuisance facts according to the traditional theories. First of all, the profitability should not be a continuous function of the firms’ size, but exhibits a number of peaks, each corresponding to a different locally optimal size. Secondly, when demand is growing, investment are expected to increase just when profits falls shorter some given threshold. The model has been tested by using a panel of data on the size and performances of Italian manufacturing firms from 1998 to 2007. Indeed, both the non-parametric analysis and a panel estimation confirm the presence of several “peaks” in the distribution of profitability by size. Furthermore, a negative statistical relationship is apparent between investment and profitability, controlling for the size of firms.
|Item Type:||MPRA Paper|
|Original Title:||Analisi dei modelli d’impresa: discontinuità e sviluppo|
|English Title:||Analysing firm's evolution: discontinuity and growth|
|Keywords:||Capacity utilization; Discontinuity; Firm’s size; Growth; Investment; Non parametric smoothing; Panel regression; Profit function|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms
D - Microeconomics > D9 - Intertemporal Choice > D92 - Intertemporal Firm Choice, Investment, Capacity, and Financing
|Depositing User:||Enrico D'Elia|
|Date Deposited:||13. Jan 2012 15:16|
|Last Modified:||21. Sep 2015 12:05|
Aghion P., N. Bloom, R. Blunell, E. Griffith e P. Howitt (2005), “Competition and Innovation: An Inverted-U Relationship”, The Quarterly Journal of Economics, vol. 120, no. 2, pp. 701 – 728.
Bachmann R. e C. Bayer (2011), ”Investment Dispersion and the Business Cycle”, Working Paper n. 16861, National Bureau of Economic Research
Bottazzi G., E. Cefis, G. Dosi, e A. Secchi (2007), “Invariances and Diversities in the Patterns of Industrial Evolution: Some Evidence from Italian Manufacturing Industries,” Small Business Economics, vol. 29, n. 1, pp. 137–159.
Caballero R. J. e E. M. R. A. Engel (1999), "Explaining Investment Dynamics in U.S. Manufacturing: A Generalized (S,s) Approach," Econometrica, vol. 67, no. 4, pp. 783-826.
Coad A. (2009), The Growth of Firms: A Survey of Theories and Empirical Evidence, Edward Elgar, Northampton.
Coltorti F. (2004), “Le medie imprese industriali italiane: nuovi aspetti economici e finanaziari”, Economia Politica e Industriale, vol. 121, no. 1, pp. 2-25.
D’Elia E. (2011), “A Simple Model of Discontinuous Firm’s Growth”, in via di pubblicazione.
Fan J. e I. Gijbels (1996), Local Polynomial Modelling and its Applications, Chapman & Hall, Londra.
Guiso L., C. Lai e M. Nirei (2011), “Detecting Propagation Effects by Observing Aggregate Distributions: The Case of Lumpy Investments”, working paper ECO 2011/25, European University Institute.
Khan A. e J. K. Thomas (2003), “Nonconvex Factor Adjustments in Equilibrium Business Cycle Models: Do Nonlinearities Matter?”, Journal of Monetary Economics, vol. 50, pp. 331–360.
Khan A. e J. K. Thomas (2008), “Idiosyncratic Shocks and the Role of Nonconvexities in Plant and Aggregate Investment Dynamics”, Econometrica, vol. 76, n. 2, pp. 395–436.
Lotti F., E. Santarelli, e M. Vivarelli (2003), “Does Gibrat’s Law Hold in the Case of Young, Small Firms?”, Journal of Evolutionary Economics, vol. 13, n. 3, pp. 213-235.
Nardecchia R., R. Sanzo, A. Zeli (2010), “La costruzione di un panel retrospettivo di micro-dati per le imprese italiane con 20 addetti ed oltre dal 1998 al 2004”, Documenti Istat n.7.
Nilsen Ø. A. e F. Schiantarelli (2003), "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities" The Review of Economics and Statistics, vol. 85, n. 4, pp. 1021-37.
Polder M., E. Veldhuizen (2010), “Innovation and Completion in the Netherlands: Testing the Inverted U for Industries and Firms”, CBS Discussion papers n. 21.
Santarelli E. e M. Vivarelli (2007), “Entrepreneurship and the Process of Firms’ Entry, Survival and Growth,” Industrial and Corporate Change, vol. 16, n. 3, pp. 455–488.
Sutton J. (1997), “Gibrat’s Legacy”, Journal of Economic Literature, vol. 35, n. 1, pp. 40- 59.
Traù F. (2000), “The Rise and Fall of the Size of Firms”, ESRC Working Paper, no. 156.
Traù F. (2003), Structural Macroeconomic Change and the Size Pattern of Manufacturing Firms, Palgrave MacMillan, New York.