Elisabetta Ottoz

The impact of ownership on the cost of bus service provision: an example from Italy

This article examines the potential impact of ownership on the cost of bus service provision for a sample of 65 private and 12 public companies providing local public transit (LPT) in Piedmont (Italy) from 1998 to 2002. A translog cost frontier is estimated using the model in Battese and Coelli (1995) where inefficiency scores are allowed to vary across firms and over time. A public ownership dummy is included in the inefficiency model and it is always positive and significant. Density and scale economies and cost inefficiencies are then computed. Private companies seem to experience higher density and scale economies than public ones. Cost inefficiencies appear higher in the public sample.

Diversification Strategies and Scope Economies: Evidence from a Sample of Italian Regional Bus Transport Providers

A growing number of Local Public Transport (LPT) companies diversify their production lines by providing a large set of services. We investigate the cost structure of a sample of LPT companies operating in Italy and assess the presence and the magnitude of scope economies. We split the whole sample of firms according to their diversification strategy: private firms, mainly diversifying in competitive transport related services and public firms providing nontransport services in regulated markets. Scope economies appear sizeable for both groups but higher for firms pursuing a transport related strategy, suggesting caution in the multiutility development pursued by public LPT firms in Italy.

Trade Secret vs. Broad Patent: The Role of Licensing

We present a simple model wherein a patents regime is inferior to a trade secrets system, meaning that when private returns from innovation under the two regimes are the same, society will be better off if the innovator chooses not to patent. In our model, trade secret licensing is envisaged and the inferiority of patents depends on the lack of an independent invention defense in patent law, while such a defense currently exists in secrecy and copyright law. Thus, although secrecy is superior to patents, it is not superior to other types of formal intellectual property rights where independent invention is allowed (such as copyrighted software).

Hybrid Organisations in the provision of Local Public Services

The aim of this work is to investigate the risk of anti competitive behaviour implied by temporary groups of service providers. The point bears policy implications as local authorities, following European Union directives, have stressed the role of such alliances in the public procurement of services. We first summarize the fragmented literature on temporary horizontal alliances in public works and services. We then deal with a case study on local public transport in order to evaluate the performance of temporary groups of service providers. The coopetitive perspective is finally discussed as an explanation stressing that, within firms’ groups, both processes of value creation and value sharing take place.

Side payments, litigation risk and settlement outcomes

We offer a simple model of patent settlement for examining how litigation prospects, patent strength and expected damage awards affect consumer benefits stemming from settlement agreements providing for per-unit royalties and non-negative fixed fees. The result shows that consumers may be harmed if expected damage payments forgone by settlement lead to agreements with high royalty payments that benefit both the patent holder and licensee at the expense of the consumer.

Different Rules of Legal-Cost Allocation and Patent Hold-Up

We study how different rules of legal-cost allocation impact on negotiated royalties in an environment where patent hold-up is possible. The model assumes that the courts routinely grant stays of permanent injunctions to allow the infringers to redesign their products or deny injunctive reliefs outright. In these scenarios we consider the American system, where each party bear s its own costs, the British system, where the loser incurs all costs, and the system favoring the defendant, where the defendant pays its own costs if it loses and nothing otherwise. Our main conclusions are that when stayed injunctions are granted the system favoring the defendant provides the best results, while under denied injunctions the American system is preferable

Static Efficiency of Compulsory Licensing: The Role of Limit Pricing

A common argument against compulsory licensing of intellectual property maintains that it facilitates the entry of inefficient producers, which may reduce social welfare independently of any effects on R&D incentives. We study the issue in a model where the innovative firm, under the threat of compulsory licensing, reacts strategically by choosing between quantity and price competition. We show that the risk of a reduction in static welfare due to the entry of highly inefficient firms is avoided if licensing entails a royalty per unit of output and no fixed fees. The rationale behind this result lies in the fact that compulsory licensing threat works as a disciplining device to improve static social welfare, even when the applicant is a high cost inefficient firm. JEL codes: KOO, L49, 034.