Ernesto Somma

The evolution of consistent conjectures

In this paper we model the evolution of conjectures in an economy consisting of a large number of firms which meet in duopolies. The duopoly game is modelled by the conjectural variation (CV) model. An evolutionary process leads to more profitable conjectures becoming more common (payoff-monotonic dynamics). Under this class of selection dynamics, convergence occurs to a small set of serially undominated strategies containing the consistent conjecture. This set can be made arbitrarily small by appropriate choice of the strategy set. If the game is dominance solvable, then the dynamics converge globally to the unique attractor.

Private Participation in Energy Infrastructure in MENA Countries: A Global Perspective

Investment in infrastructure, although historically dominated by public intervention, is experiencing a growing role via public and private partnerships (PPP). This trend traced a steady increase since the start of the privatization and liberalization process that took place in most OECD countries in the 1990s and peaked in 2012. While the study of the long list of factors that determine the attractiveness of an investment in energy infrastructure has been performed elsewhere in this book, we look at the emerging global trends in the energy, transport, and water and sewage sectors. We then narrow our overview to the energy sector, showing an interesting peculiarity both in terms of the relative regional attractiveness and the dynamics of the countries concerned. Finally, we explore the private participation in infrastructure (PPI) picture for energy investments in the Middle East and North African (MENA) countries, which are lagging behind both in relative and absolute terms. Moreover, the two countries that dominate the scene in the MENA region (Morocco and Jordan) are those that perform better in terms of a political stability score and rule of law score according to the World Bank. While further analysis will be necessary to define the relative impact of each enabling factor in the investment decision-making process, it appears evident that those two indicators are likely to determine the attractiveness of the market concerned for investment dominated by long lead times and irreversibility.

Local industrial structure, agglomeration economies and the creation of innovative start-ups: evidence from the Italian case

Abstract We explore the local factors associated with the emergence of innovative start-ups fostered by a targeted industrial policy intervention in Italy. We focus on the local industrial fabric and the agglomeration mechanisms, namely localization (specialization) economies, diversification economies and the proximity to large firms. Results show that both localization economies and diversification economies are at play. Notably, a greater presence of large firms at local level seems to support the creation of innovative start-ups. Other factors, such us the presence of technical and scientific universities and the urbanization, are found to encourage their formation. The contribution of local factors to the innovative start-up creation is found to be different depending on the regional development conditions. Our analysis outlines the features of a local ecosystem favourable to the emergence of these firms, providing policy makers with suggestions for moulding industrial policies to regional specific needs and to better exploit the local opportunities.