Juan A. Mañez

The Role of Sunk Costs in the Decision to Invest in R&D

We present a dynamic empirical model of a firms R&D decisions that is consistent with the existence of sunk R&D costs, taking into account that these costs may differ between small and large firms, and among different technological regimes. We estimate a multivariate dynamic discrete choice model using firm-level data of Spanish manufacturing for 1990–2000. Conditional on firm heterogeneity and serially correlated unobservable factors, we find that R&D history matters. This true state dependence allows inferring the existence of sunk R&D costs associated with performing R&D. Sunk R&D costs are found to be higher for large, high-tech firms.

Unbeatable Value Low-Price Guarantee: Collusive Mechanism or Advertising Strategy?

This paper investigates the effects of a low-price guarantee (price-beating guarantee) on the patterns of price setting of three supermarkets using micro-level price data. Following recent theoretical developments, the paper analyzes the ability of low-price guarantees to sustain anticompetitive prices. My empirical analysis suggests instead that this low-price guarantee may serve as an advertising device to signal low prices. The supermarket offering the low-price guarantee, aware of its price advantage in a subset of products, uses it to signal low prices to induce consumers to switch supermarkets.

The decision to export: a panel data analysis for Spanish manufacturing

This paper aims to empirically analyse the determinants of the decision to export using a sample of Spanish manufacturing firms during the 1990s. The data are drawn from the Encuesta sobre Estrategias Empresariales. A panel data probit model is used that is estimated using maximum-likelihood techniques. The results show that regional and local spillovers and firm characteristics such as age, size, productivity, corporation, foreign ownership, R&D and advertising intensity, have a positive and significant influence on the probability of exporting. Furthermore, public sector oriented sales have a significant and negative impact.

EXPERIMENTAL DUOPOLIES UNDER PRICE GUARANTEES

In a symmetric differentiated experimental duopoly we test the ability of Price Guarantees (PGs) to raise prices above the competitive levels. Different types of PGs (‘aggressive’ and ‘soft’ price-beating and price-matching) are implemented either as an exogenously imposed market rule or as a business strategy. Our results show that PGs may lead close to the collusive outcome, depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the ‘aggressive’ price-beating type.

Understanding the Dynamic Effect of Contracting Out on the Delivery of Local Public Services

Máñez J., Pérez-López G., Prior D. and Zafra-Gómez J. L. Understanding the dynamic effect of contracting out on the delivery of local public services, Regional Studies. Contracting out is a mechanism through which the delivery of public services can be made more efficient. However, the process has yielded conflicting results. This paper presents a dynamic, mixed approach, incorporating an intertemporal frontier and a matching technique, to measure the short- and long-term effects of the implementation of contracting out on the efficiency of local public service delivery. The study demonstrates the existence of temporary inefficiency arising from the change in service management when contracting out takes place, followed by an increase in efficiency among municipalities that contract out, with respect to comparable municipalities that do not do so.

Export intensity and the productivity gains of exporting

This article analyses whether the productivity gains associated with Learning-by-Exporting (LBE) (controlling for self-selection) depend on the intensity of the firms exporting activity. The results from a representative sample of Spanish manufacturing firms indicate that the yearly average gains in productivity are larger for those firms that increase their export-to-sales ratio.

The export-productivity link in Brazilian manufacturing firms

This paper explores the link between exports and total factor productivity in Brazilian manufacturing firms over the period 2000–08. The Brazilian experience is instructive, as it is a case of an economy that expanded aggregate exports significantly, but with stagnant aggregate growth in total factor productivity. The paper first estimates firm-level total factor productivity under alternative assumptions (exogenous and endogenous law of motion for productivity) following a GMM procedure. In turn, the analysis uses stochastic dominance techniques to assess whether the ex ante most productive firms are those that start exporting (self-selection hypothesis). Finally, the paper tests whether exporting boosts firms’ total factor productivity growth (learning-by-exporting hypothesis) using matching techniques to control for the possibility that selection into exports may not be a random process. The results confirm the self-selection hypothesis and show that starting to export yields additional growth in total factor productivity that emerges since the firm’s first year of exporting but lasts only one year. Further, this extra total factor productivity growth is much higher under the assumption of an endogenous law of motion for productivity, which reinforces the importance of accounting for firm export status to study the evolution of productivity.

The impact of the Great Recession on TFP convergence among EU countries

ABSTRACT This article provides evidence on the effect of the Great Recession on productivity convergence among European Union (EU) economies. We use firm data, aggregated at the country-year level, to analyse the evolution of beta-convergence on total factor productivity (TFP) for 2003–2014. We obtain a positive impact of the recession on TFP (unconditional and conditional) beta-convergence across EU economies. These results support the existence of a catching-up process within the EU during the recent financial crisis. Other macroeconomic and institutional characteristics are important in fostering TFP growth, namely R&D intensity and quality of governance.

Are Low Prices Compromises Collusion Guarantees? An Experimental Analysis of Price Matching Policies

In this paper we experimentally test the ability of Price-Matching Guarantees (PMG) to rise prices above the competitive level. We implement three different treatments of symmetric duopolies to check the effect of PMG both as a market institution and as a business strategy. In the absence of any low-price guarantee, prices get close to the Bertrand-Nash equilibrium although in the 50 rounds of the experiment no full convergence is obtained. The existence of PMG as an institution in a market where firms decide only about prices results in a clear collusive outcome as all markets quickly and fully converge to the collusive prediction. If we allow subjects to decide whether they adopt price matching or not we observe that almost all subjects decide to adopt PMG; prices significantly increases over the first treatment observed prices and are very close to the collusive ones.

Product and process innovation and total factor productivity: Evidence for manufacturing in four Latin American countries

The literature on firm productivity recognizes the important role played by firm innovation activities on firm productivity in developed countries. However, the literature for developing and emerging economies is scarce and far from conclusive. The aim of this paper is to study the innovation–productivity link (distinguishing between process and product innovations) for manufacturing at the firm level for four Latin American countries (two classified as upper-middle income countries by the World Bank—Argentina and Mexico—and two as lower-middle income—Colombia and Peru). We aim testing whether the level of development is a mediating factor in the innovation–productivity link. The data used have been drawn from the World Bank panel enterprise surveys, for 2006 and 2010. First, we estimate total factor productivity (TFP) and, second, we use the estimated TFP as a regressor or as dependent variable, in two models for testing self-selection of the most productive firms into innovation or the existence of returns to innovation in terms of productivity. Our results confirm the mediating role of the level of development in the innovation–productivity link: both the self-selection and the returns-to-innovation hypotheses work only for the upper-middle income countries.