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Technology and Firm Size Distribution:Evidence from Italian Manufacturing

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Author Info

  • Crosato, Lisa

    ()
    (Dipartimento di Statistica, Università 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,Università 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.

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Bibliographic Info

Paper provided by CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy in its series CELPE Discussion Papers with number 102.

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Length: 35 pages
Date of creation: 01 Mar 2007
Date of revision:
Handle: RePEc:sal:celpdp:0102

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Keywords: Italian manufacturing; Free Disposal Hull; Pareto distributions; Returns to scale;

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References

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  1. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2003. "Does Gibrat's Law hold among young, small firms?," Journal of Evolutionary Economics, Springer, Springer, vol. 13(3), pages 213-235, August.
  2. Gijbels, Irène & Mammen, Enno & Park, Byeong U. & Simar, Léopold, 1998. "On estimation of monotone and concave frontier functions," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 1998,9, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  3. Francesca Lotti & Marco Vivarelli & Enrico Santarelli, 2004. "Gibrat's Law and Market Selection," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2004-28, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  4. Giulio Bottazzi & Marco Grazzi & Angelo Secchi, 2004. "Characterizing the Production Process: A Disaggregated Analysis of Italian Manufacturing Firms," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2004/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  5. Giulio Bottazzi & Elena Cefis & Giovanni Dosi & Angelo Secchi, 2003. "Invariances and Diversities in the Evolution of Manufacturing Industries," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2003/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  6. Dunne, Paul & Hughes, Alan, 1994. "Age, Size, Growth and Survival: UK Companies in the 1980s," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 42(2), pages 115-40, June.
  7. Peter Hart & Nicholas Oulton, 1997. "Zipf and the size distribution of firms," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 4(4), pages 205-206.
  8. Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, Cambridge University Press, vol. 14(06), pages 783-793, December.
  9. Kerstens, Kristiaan & Vanden Eeckaut, Philippe, 1999. "Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit," European Journal of Operational Research, Elsevier, Elsevier, vol. 113(1), pages 206-214, February.
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