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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 Vadalà

    () (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 Vadalà, 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: http://www.bancaditalia.it/pubblicazioni/qef/2017-0408/QEF_408.pdf
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    Cited by:

    1. 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.
    2. 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.

    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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