Giulio Bottazzi

Why are distributions of firm growth rates tent-shaped?

Abstract Recent empirical analyses on different datasets have revealed a common exponential behavior in the shape of the probability density of the corporate growth rates. We present new evidence on this topic from the Italian Manufacturing Industry and propose a very simple mechanism that, under rather general assumptions, provides a robust explanation for the observed regularities.

A stochastic model of firm growth

Recently from analyses on different databases the tent-shape of the distribution of firm growth rates has emerged as a robust and universal characteristic of the time evolution of corporates. We add new evidence on this topic and we present a new stochastic model that, under rather general assumptions, provides a robust explanation for the observed regularity.

Cities and Clusters: Economy-Wide and Sector-Specific Effects in Corporate Location

Bottazzi G. and Gragnolati U. Cities and clusters: economy-wide and sector-specific effects in corporate location, Regional Studies. Are the observed spatial distributions of firms decided mostly by economy-wide urbanization economies or rather by sector-specific localization economies? This paper finds that the latter kind of forces weight systematically more than the former in deciding firm location. The analysis uses Italian data on a variety of manufacturing and service sectors spatially disaggregated at the level of local labour market areas.

A laboratory experiment on the minority game

This work presents experimental results on a coordination game in which agents must repeatedly choose between two sides, and a positive fixed payoff is assigned only to agents who pick the minoritarian side. We conduct laboratory experiments in which stationary groups of five players play the game for 100 periods, and manipulate two treatment variables: the amount of ‘memory’ M that players have regarding the game history (i.e., the length of the string of past outcomes that players can see on the screen while choosing) and the amount of information about other players’ past choices. Our results show that, at the aggregate level, a quite remarkable degree of coordination is achieved. Moreover, providing players with full information about other players’ choice distribution does not appear to improve efficiency significantly.

On the Ubiquitous Nature of Agglomeration Economies and Their Diverse Determinants: Some Notes

This highly preliminary work attempts to study the multiple drivers of agglomeration phenomena in contemporary economies and proposes a tentative taxonomy where the conditions of knowledge accumulation, often specific-to-specific locations and specific sectors, play a paramount role. We discuss the achievements and limitations of current theorizing on spatial location of economic activities, and we propose a simple model, which is estimated on Italian data, highlighting the rich intersectoral diversity of agglomeration forces, together with, in a few cases, also lack of them.

Small-x one-particle-inclusive quantities in the CCFM approach

This article presents the results of a quantitative study of the small-x data at HERA, using the CCFM equation. The first step consists of choosing the version of the CCFM equation to be used, corresponding to selecting a particular subset of next-to-leading-logarithmic corrections --- the choice is constrained by requiring a phenomenologically reasonable small-x growth. For the time being, the parts of the splitting functions that are finite at z = 0 have been left out. We then examine results for F2c, R, the transverse energy flow, the charged-particle transverse-momentum spectrum and the forward-jet cross section and compare to data. While some of the data is reproduced better than with DGLAP-based calculations, the agreement is not entirely satisfactory, suggesting that the approach developed here is not yet suitable for detailed phenomenology. We discuss why, and suggest directions for future work.

Measuring Industry Relatedness and Corporate Coherence

Since the seminal work of Teece et al. (1994) firm diversification has been found to be a non-random process. The hidden deterministic nature of the diversification patterns is usually detected comparing expected (under a null hypothesys) and actual values of some statistics. Nevertheless the standard approach presents two big drawbacks, leaving unanswered several issues. First, using the observed value of a statistics provides noisy and nonhomogeneous estimates and second, the expected values are computed in a specific and privileged null hypothesis that implies spurious random effects. We show that using Monte Carlo p-scores as measure of relatedness provides cleaner and homogeneous estimates. Using the NBER database on corporate patents we investigate the effect of assuming different null hypotheses, from the less unconstrained to the fully constrained, revealing that new features in firm diversification patterns can be catched if random artifacts are ruled out.

Expectations Structure in Asset Pricing Experiments

Notwithstanding the recognized importance of tradersi?½ expectations in characterizing the observed market dynamics, for instance the formation of speculative bubbles and crashes on financial markets, little attention has been devoted so far by economists to a rigorous study of expectation formation in the laboratory. In this work we describe a laboratory experiment on the emergence and coordination of expectations in a pure exchange framework. We largely base our study on previous experiments on expectation formation in a controlled laboratory environment by Cars Hommes, Joep Sonnemans, Ian Tuinstra and Henk van de Velden (2002a). We consider a simple two asset economy with a riskless bond and a risky stock. Each market is composed of six experimental subjects who act as financial advisors of myopic risk-averse utility maximizing investors and are rewarded according to how well their forecasts perform in the market. The participants are asked to predict not only the price of the risky asset at time t+1, as in Hommes et al. (2002a), but also the confidence interval of their prediction, knowing the past realizations of the price until time t i?½ 1. The realized asset price is derived from a Walrasian market equilibrium equation, unknown to the subjects, with feedback from individual forecasts. Subjectsi?½ earnings are proportional to the increase in their wealth level. With respect to previous experiments that did not include an explicit evaluation of risk by participants, we observe a higher price volatility, a decreased likelihood of bubble dynamics and, in general, a higher heterogeneity of predictions.

Structure function and angular ordering at small x

We compute the gluon distribution in deep inelastic scattering at small x by solving numerically the angular ordering evolution equation. The leading-order contribution, obtained by neglecting angular ordering, satisfies the BFKL equation. Our aim is the analysis of the subleading corrections. Although not complete — the exact next-to-leading contribution is not yet available — these corrections are important since they come from the physical property of coherence of QCD radiation. In particular we discuss the subleading correction to the BFKL characteristic function and the gluon distributions dependence on the maximum available angle. Conformal invariance of the BFKL equation is lost, however this is not enough to bring the small-x gluon distribution into the perturbative regime: although large momentum regions are enhanced by angular ordering, the small momentum regions are not fully suppressed. As a consequence the gluon anomalous dimension is finite and tends to the BFKL value γ = 12 for αs → 0. The main physical differences with respect to the BFKL case are that angular ordering leads to (1) a larger gluon anomalous dimension, (2) less singular behaviour for x → 0 and (3) reduced diffusion in transverse momentum.

An evolutionary model of firms' location with technological externalities

In an economic geography model where both a negative pecuniary and a positive technological externality are present, we introduce an explicit dynamics of firms locational choice and we characterize its long run distribution. Our analysis shows that economic activities evenly distribute when the pecuniary externalities prevail, and agglomerate otherwise. Due to the stochastic nature of the dynamics, even when agglomeration occurs, it is only a metastable state. By giving time and firms heterogeneity a role, we are bringing the evolutionary approach inside the domain of economic geography.