Filippo Oropallo

Is it Time for a Revival of ETR in Italy? Energy Elasticities and Factor Substitutability for Manufacturing Firms

Environmental Tax Reforms (ETRs) have recently enjoyed renewed widespread attention as a tool aimed at GHG emission abatement. In this paper the efficacy of energy-related taxes in relation to Italian firms’ behaviour is analyzed. A translog model is used to estimate factor demands for a panel of industrial firms divided between small-medium and large enterprises. Our analysis estimates large and negative own price elasticities for energy. As for other inputs, we find complementarity between energy and capital and substitutability between energy and labour for small firms therefore a double dividend effect could take place if ETR is implemented.

Firms' energy demand and the role of energy taxes: Elasticities estimation of industrial firms in Italy

In this paper we investigate interfuel substitution in the Italian industrial sector using a micro-dataset and a micro-simulation model for firms. According to our estimates there are significant differences between small and large firms. Energy demand of main energy products is not very responsive to relative price changes in the case of firms under 250 workers, whereas higher (negative) own elasticities have been estimated for larger firms, suggesting that price signals are most effective in the latter case. Most of the cross-price elasticities have positive signs, confirming that there is room for a change in energy product mix, which may also be stimulated by a careful excise tax rate design.

Accise energetiche e competitività nelle imprese : un'applicazione sull'esperimento della carbon tax.

An international debate on which economic instrument should be used to reduce pollutant emissions has begun since the nineties when the awareness of climatic risks aroused and first attempts to introduce a European carbon tax were made. Although this project failed, several national programmes of carbon/energy taxes have been developed with a common concern for industrial competitiveness of energy and/or carbon-intensive firms. Therefore, double dividend schemes have been applied to reduce existing distorsive taxes while introducing a higher burden on energy products. This paper reviews the most important European case studies and analyses the effects of the introduction of a carbon tax in Italy on energy expenditure and economic profitability of Italian manufacturing enterprises. This tax has been introduced in 1998 and should have progressively increased up to the final tax rates in 2005. However, this process halted in the year 2000 as the world energy prices increased and the ultimate rates have never been applied. Nonetheless, our analysis offers relevant insights both because energy excises are a major instrument in environmental policy and because industrial activities affected by energy taxes will also be affected by the tradable permits scheme recently adopted by the European Union. The study is performed with a microsimulation model to simulate changes in energy excises and the associated reduction of social contributions to achieve the double dividend. Existing empirical analyses have usually been carried out at aggregate or sectoral level, but the effects on costs both of carbon tax and of compensative measures differ at the firm level, thus it is significant to study the impact on economic profitability on individual units of analysis. The data show that energy expenditure as a component of intermediate costs varies by economic activity as well as the energy mix used in the production process, thus suggesting possible competitiveness problems for some firms as taxation is linked to the carbon content of each energy source. A further element is the sectoral and dimensional variability of prices of some energy products which introduces an additional information to evaluate the impact of rising international energy quotations. The empirical results show a large sectoral and dimensional differentiation of economic effects although the estimated impact on competitiveness is negligible for most sectors. The difference is due to the energy intensity of production and to the energy mix for each process as well as to the quantity of labour employed. In general, the tax burden in the year 2000 has produced fiscal savings compared to the previous tax rules, as the reduction of social contributions has been higher than the cost due to the carbon tax. However, some exceptions occur: economic activities where heavily-taxed products are used such as coal and coke are not fully compensated by the social contribution cut: this is the case of metal products and the production of non metallic mineral products. Moreover, small and medium enterprises benefited more than large industrial firms. As the EU tradable permits scheme will fully come into force and a policy mix of excises and permits on energy products will deploy its effects on the same group of energy-intensive firms, this set of fiscal environmental rules is likely to produce dissimilar effects by economic sectors and by firm size which are worth investigating.

Entrepreneurs' Behaviour and Performance: An Empirical Analysis on Italian Firms

This paper provides empirical evidence about differently performing Italian firms, using micro-data drawn from Istat structural business statistics. The analysis performed identifies four groups of firms that follow different strategies in terms of profits and productivity. The first is related to small dimensions, low quality of human capital, investment intensity. The second is mainly associated to sole proprietorships operating in family services. The third is positively associated to higher quality of human capital, investment and debt intensity. The fourth depicts large companies of northern regions involved in scale intensive sectors. Finally, multivariate techniques allow to quantify the impact of some variables on different profiles.