Does Public Infrastructure Reduce Private Inventory?
The discipline of operations management is rarely studied with an eye on public policies. Yet, it is glaring to even the casual observer that public infrastructure is very different in different countries. How does public infrastructure affect private sector inventory levels? I develop as a baseline a substitution hypothesis, which predicts that infrastructure reduces inventory. I also consider competing hypotheses that can explain negative correlation between infrastructure and inventory. To empirically distinguish these hypotheses, I use data on public firms from 60 countries. The econometric challenge is in identifying the exogenous component of infrastructure changes. I address that using instrumental variables consisting of physical attributes of countries - such as their elevation, whether they are land-locked, their mean distance to a coast or river. I find evidence consistent with the substitution hypothesis. This finding is robust to many tests.
|Date of creation:||15 Jun 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
- Hong Chen & Murray Z. Frank & Owen Q. Wu, 2005. "What Actually Happened to the Inventories of American Companies Between 1981 and 2000?," Management Science, INFORMS, vol. 51(7), pages 1015-1031, July.
- Goonatilake, Lalith, 1990. "Inventory management in the manufacturing sector in developing countries," Engineering Costs and Production Economics, Elsevier, vol. 19(1-3), pages 19-24, May.
- Chikan, Attila & Whybark, D. Clay, 1990. "Cross-national comparison of production--inventory management practices," Engineering Costs and Production Economics, Elsevier, vol. 19(1-3), pages 149-156, May.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:4756. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.