Innovation, competition and public procurement in the pre-commercial phase

Should the supply or the demand side bear the risk connected to innovation? The two polar cases identified in the literature are the supply push and the demand pull. The former is the typical one, with the supplier bearing the costs and obtaining the benefits from innovating. The latter is technology procurement, where the buyer takes the risk, by procuring the innovative good or service. With respect to this, pre-commercial procurement is a peculiar solution that can explain the debate found in the literature relative to its configuration either as a supply-side or a demand-side instrument. The separation from the commercial phase allows the procurer to take only (part of) the risks connected to R&D services. Also, competition among suppliers gives the opportunity of evaluating different solutions and to obtain, in the commercial phase, a lower price for the innovative good. The counterpart of all this is a large portion of risk being left to the supplier. As a consequence, suppliers need to obtain a larger share of the benefits of the innovation process. This economic reason, besides the legal restrictions on State aid, explains the need for a shared risks-shared benefits approach, centred on the agreements on the assignment of IPRs

Constraining the Number of Positive Responses in Adaptive, Non-Adaptive, and Two-Stage Group Testing

Group testing is a well known search problem that consists in detecting the defective members of a set of objects O by performing tests on properly chosen subsets (pools) of the given set O. In classical group testing the goal is to find all defectives by using as few tests as possible. We consider a variant of classical group testing in which one is concerned not only with minimizing the total number of tests but aims also at reducing the number of tests involving defective elements. The rationale behind this search model is that in many practical applications the devices used for the tests are subject to deterioration due to exposure to or interaction with the defective elements. In this paper we consider adaptive, non-adaptive and two-stage group testing. For all three considered scenarios, we derive upper and lower bounds on the number of "yes" responses that must be admitted by any strategy performing at most a certain number t of tests. In particular, for the adaptive case we provide an algorithm that uses a number of "yes" responses that exceeds the given lower bound by a small constant. Interestingly, this bound can be asymptotically attained also by our two-stage algorithm, which is a phenomenon analogous to the one occurring in classical group testing. For the non-adaptive scenario we give almost matching upper and lower bounds on the number of "yes" responses. In particular, we give two constructions both achieving the same asymptotic bound. An interesting feature of one of these constructions is that it is an explicit construction. The bounds for the non-adaptive and the two-stage cases follow from the bounds on the optimal sizes of new variants of d-cover free families and (p,d)-cover free families introduced in this paper, which we believe may be of interest also in other contexts

Welfare state and social spending: assessing the effectiveness and the efficiency of European social policies in 22 EU countries

This paper aims at analysing the effectiveness and the efficiency of social public expenditure in 22 European countries. We present a basic theoretical framework connecting the choice of the level of social protection to the median voter’s preferences and the inefficiency of expenditure. To test it against real data, we construct performance and efficiency indicators. While the existing literature measures the performance of social policy restricting the analysis to its impact on inequality and the labour market, our index summarises the outcomes achieved in all sectors of social protection (family, health, labour market elderly, disabled, unemployment, inequality). Based on this, we find that the ranking of countries differs from those found in the literature. We then put together performance and the amount of expenditure needed to achieve it (to better compare countries, we use social public expenditure net of tax and transfers), constructing efficiency indicators and a production possibility frontier through the FHD method. We find that efficiency is not related to the size of public intervention. Rather, our results suggest that population size and the type of the welfare system might be more relevant factors: small countries tend to be more efficient than large ones and targeting all sectors of social policy tends to be more efficient than concentrating on some areas only

Clustering European Welfare Systems through a Performance Index

We construct a composite performance indicator to assess the relative performance of welfare policies in the EU countries. We show that the variability of performances cannot be explained only by the amount of resources devoted to social policies, but also by the composition of social expenditure: countries with higher shares of redistributive public expenditure obtain better results in the social sector. This result confirms the association between the type of welfare system, according to the traditional four-way classification, and the performance level. However, considering a more complete set of indicators of the structure of the welfare systems, we find that European countries cannot be grouped according to the traditional classification. Considering expenditure-side indicators and financing-side indicators together, three groups form: one comprising the UK and Iceland, one the Nordic countries and the Netherlands, one the continental (and southern) countries and Ireland

Efficient social policies with higher expenditure: an analysis for European countries

Based on the construction of two indicators to assess the relative effectiveness and efficiency of European welfare policies, we show that the variability of efficiency cannot be explained only by the amount of resources devoted to social policies but also by the institutional environment. The OLS regression shows that institutional variables- such as accountability and honesty of public officials- have high significant effects on the efficiency

The multimarket contacts theory; an application to Italian banks

The multimarket contact hypothesis holds that more contacts between firms competing in the same markets may induce more collusion. This paper tests the hypothesis for the Italian banking market, analysing the behaviour of the largest Italian banks from 1990 to 1996. Market rivalry is gauged by changes in loan market shares and interest rates in each Italian province. Different measures of multimarket contacts are built. We estimate the effects of increasing multimarket contacts, concentration indicators, banksÂ’ costs and loan growth on variations in market shares and interest rates. No support is found for the multimarket contact hypothesis. Geographical overlap in banking is positively correlated with changes in market shares, confirming the thesis of an overall increase in competition within the Italian banking system. Greater multimarket links also seem to correspond to lower lending rates.banks, antitrust policy, multimarket contacts, panel data

What determines the size of bank loans in industrialized countries? The role of government debt

Given the importance of banking intermediation, we investigate the determinants of the size of bank loans in 18 OECD countries in the period 1981-1997. The aim of the paper is to show that the ratio of government debt to GDP has a negative effect on the level of bank credit. Second, countries with a German legal origin have higher ratios of loans to GDP than common law countries. Our results are robust to including such variables in the regressions as per capita GDP, stock market capitalization, the banking reserve requirement, the level of inflation and its volatility, openness to trade and the use of different econometric methods.bank loans, government debt, financial repression, legal origin of finance

A COMPARATIVE STUDY OF ALTERNATIVE ECONOMETRIC PACKAGES: AN APPLICATION TO ITALIAN DEPOSIT INTEREST RATES

In examining the determinants of Italian deposit interest rates, we compares alternative econometric packages for estimating panel data. We focus on bank deposits, one of the main forms Italian households use to invest their financial wealth. We survey the literature on deposit rates, with particular reference to the large number of US studies. The empirical analysis is based on more than 8,000 observations for the years 1990-1996. Bank interest rates are taken from the Central Credit Register. We consider the rates on current accounts, certificates of deposit, and total deposits. Other variables are obtained from the Banking Supervision1s statistical returns. We look at the influence on interest rates of the Herfindahl index, the number of banks in each province, the rate of growth in deposits, the custodial holdings of bonds, the ratio of banking costs to total assets.With this abundance of panel data, many different specifications have been estimated using the fixed- and random-effects models. Our purpose is to examine the caveats about numerical accuracy raised by McCullogh and Vinod, who are concerned that little attention is paid to numerical accuracy in the selection of econometric packages. We compare the numerical value of the estimates of three of the most popular econometric packages featuring built-in panel data estimation algorithms: LIMDEP, STATA, and TSP. As a numerical benchmark we used Modeleasy, a general-purpose language allowing matrix operations.The preliminary results look quite promising:1) fixed-effects algorithms are numerically the same to the available decimal places.2) random-effects algorithms yield slightly different results because of the method for computing the variance components.In addition, we compare the relative efficiency of the random-effects algorithms provided by the three packages. This is done by means of a set of suitably designed Monte Carlo experiments, varying the time span and the number of provinces taken into account.