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Municipal socialism or municipal capitalism? The performance of local public enterprises in Italy

Author

Listed:
  • Nicola Curci

    (Bank of Italy)

  • Domenico Depalo

    (Bank of Italy)

  • Emilio Vadal�

    (Bank of Italy)

Abstract

This paper evaluates the performance of Italian local public enterprises (LPEs) with respect to their private sector counterparts. We address the following questions: i) do LPEs perform worse than (comparable) private firms?; ii) does the performance gap depend on the ownership structure (the share held by the public) or on the market structure (the degree of competition in the sector)?; iii) which are the main determinants of LPEs' performance in terms of productivity? The main findings � which are robust to the possible endogeneity of the ownership structure � are as follows: i) LPEs perform less well than private companies by about 8 percent in terms of TFP; ii) although both ownership structure and market structure matter, our results suggest that the ownership structure is more important; and iii) the performance gap of LPEs with respect to private firms seems to be driven by over-capitalization rather than by over-employment.

Suggested Citation

  • Nicola Curci & Domenico Depalo & Emilio Vadal�, 2017. "Municipal socialism or municipal capitalism? The performance of local public enterprises in Italy," Questioni di Economia e Finanza (Occasional Papers) 408, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_408_17
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2017-0408/QEF_408.pdf
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    Citations

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    Cited by:

    1. Audinga Baltrunaite & Mario Cannella & Sauro Mocetti & Giacomo Roma, "undated". "Board composition and performance of state-owned enterprises: Quasi-experimental evidence," Temi di discussione (Economic working papers) 1328, Bank of Italy, Economic Research and International Relations Area.
    2. Andrea ZATTI, 2021. "Introduction," CIRIEC Studies Series, in: Andrea ZATTI & CIRIEC (ed.), Accountability, anti-corruption, and transparency policies in Public-Owned Enterprises (POEs), volume 2, chapter 0, pages 9-19, CIRIEC - Université de Liège.
    3. Andrea De Meo & Lorenzo Ferrari, 2018. "Political Turnover and the Performance of Local Public Enterprises," CEIS Research Paper 438, Tor Vergata University, CEIS, revised 08 Aug 2018.
    4. Andrea Zatti, 2022. "Accountability, anti-corruption, and transparency policies in Public owned enterprises (POEs): The case of Italy," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2022(1), pages 43-78.
    5. Andrea ZATTI, 2021. "Public-Owned Enterprises (POEs): definition, evolution, and evaluation / Context," CIRIEC Studies Series, in: Andrea ZATTI & CIRIEC (ed.), Accountability, anti-corruption, and transparency policies in Public-Owned Enterprises (POEs), volume 2, chapter 0, pages 21-42, CIRIEC - Université de Liège.
    6. Andrea ZATTI, 2021. "The case of Italy," CIRIEC Studies Series, in: Andrea ZATTI & CIRIEC (ed.), Accountability, anti-corruption, and transparency policies in Public-Owned Enterprises (POEs), volume 2, chapter 0, pages 43-60, CIRIEC - Université de Liège.
    7. Sauro Mocetti & Giacomo Roma, 2020. "From 8,000 to 1,000? Rationalization and governance of Italian Government-owned enterprises," Questioni di Economia e Finanza (Occasional Papers) 570, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    local public firm; firm performance; instrumental variables;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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