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Technology and Firm Size Distribution:Evidence from Italian Manufacturing

Author

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  • Crosato, Lisa

    (Dipartimento di Statistica, UniversitÃÂÃÂÃÂÃÂ di Milano - Bicocca)

  • Destefanis, Sergio

    (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)

  • Ganugi, Piero

    (Dipartimento di Scienze Economiche e Sociali,UniversitÃÂÃÂÃÂÃÂ Cattolica del Sacro Cuore di Piacenza)

Abstract

This paper explores the relationship between firm size distribution and technology. Similarly to Crosato and Ganugi (2006), we focus on six industries from the Micro1 survey by the Italian Statistical National Office (ISTAT). Firm technology is analysed across selected industries by means of a non-parametric production analysis, the Free Disposal Hull approach (Deprins et al., 1984; Kerstens and Vanden Eeckaut, 1999). The existence of a link between technical efficiency and size on the one hand, and between scale elasticity and size on the other is investigated. Graphical analyses show the absence of a clear-cut relation in the first case, while an inverse relation is found in the second one. Building on this relation, we inquire whether the shape of the firm size-distribution is related to a particular pattern of returns to scale. This problem is studied through the Zipf Plot (Stanley et al., 1995) of the Pareto IV distribution, which is concave for firms up to a given threshold, and then becomes linear. Results show that firms in the concave part of the plot experience increasing returns to scale. On the contrary, firms in the linear part are mainly characterised by constant returns to scale.

Suggested Citation

  • Crosato, Lisa & Destefanis, Sergio & Ganugi, Piero, 2007. "Technology and Firm Size Distribution:Evidence from Italian Manufacturing," CELPE Discussion Papers 102, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    • Handle: RePEc:sal:celpdp:0102
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    References listed on IDEAS

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    More about this item

    Keywords

    Italian manufacturing; Free Disposal Hull; Pareto distributions; Returns to scale;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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