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We study a system of equations on a compact complex manifold, that couples the scalar curvature of a Kaehler metric with a spectral function of a first-order deformation of the complex structure. The system comes from an infinite-dimensional Kaehler reduction, which is a hyperkaehler reduction for a particular choice of the spectral function. The system can be formally complexified using a flat connection on the space of first-order deformations that are compatible with a Kaehler metric. We describe a variational characterization of the equations, a Futaki invariant for the system, and a generalization of K-stability that is conjectured to characterize the existence of solutions to the system. We verify a particular case of this conjecture in the context of toric manifolds., Comment: v3: 34 pages. Corrected the statement of Lemma 3.3, improved the exposition in Section 2. Comments are welcome!

The Donaldson-Fujiki K\"ahler reduction of the space of compatible almost complex structures, leading to the interpretation of the scalar curvature of K\"ahler metrics as a moment map, can be lifted canonically to a hyperk\"ahler reduction. Donaldson proposed to consider the corresponding vanishing moment map conditions as (fully nonlinear) analogues of Hitchin's equations, for which the underlying bundle is replaced by a polarised manifold. However this construction is well understood only in the case of complex curves. In this paper we study Donaldson's hyperk\"ahler reduction on abelian varieties and toric manifolds. We obtain a decoupling result, a variational characterisation, a relation to $K$-stability in the toric case, and prove existence and uniqueness under suitable assumptions on the ``Higgs tensor''. We also discuss some aspects of the analogy with Higgs bundles., Comment: 43 pages. Accepted version. Upgraded the previous results to consider uniform toric K-stability

We study an infinite-dimensional hyperkahler reduction introduced by Donaldson and associated with the constant scalar curvature equation on a Riemann surface. It is known that the corresponding moment map equations admit special solutions constructed from holomorphic quadratic differentials. Here we obtain a more general existence result and so a larger hyperkahler moduli space.

Conglomerates operating integrated productions in different regulated and unregulated sectors may benefit of scope economies. However, the precise size of these synergies is often unknown to both rival firms and regulators. We show that the conglomerate's private information on scope economies may negatively affect both the regulated and the unregulated sectors depending on the precise nature of competition (strategic substitutes or complements). We also unveil a novel effect of regulation that involves an informational externality to the conglomerate's rivals. Notwithstanding these complications, and independently of the nature of competition, we show that in our model it is desirable, as for welfare, to let the firm run integrated productions, unless diseconomies of scope may realize. (JEL L51, L43, L52)

This paper examines retail competition in a liberalized gas market. Vertically integrated firms run both wholesale activities (buying gas from the producers under take-or-pay obligations) and retail activities (selling gas to final customers). The market is decentralized and the firms decide which customers to serve, competing then in prices. We show that TOP clauses limit the incentives to face-to-face competition and determine segmentation and monopoly pricing even when entry of new competitors occurs. The development of wholesale trade, instead, may induce generalized entry and retail competition. This equilibrium outcome is obtained if a compulsory wholesale market is introduced, even when firms are vertically integrated, or under vertical separation of wholesale and retail activities when firms can use only linear bilateral contracts.

We investigate how the general principles of the Treaty have been applied to the car sector in the EU, given the specific soft law provisions which are typical of the sector. A detailed quantitative analysis from 1990 to 2008 highlights a reduction of aid over time. A shift from sectoral to Òregional developmentÓ motives in granting aid to the sector is also observed in the last ten years. However, sector specific aid is now less explicit but it remains important. Large amounts of public money are spent without a consistent strategy, reducing capacity in some cases, expanding it in others. The scarcity of public funds calls for a more focussed European policy for this industry.

This paper examines the welfare effects of physically interconnecting two (network) markets that were previously separated. In each market a different set of capacity-constrained firms operate. Firms engage in a supergame and collude whenever it is rational for them to do so.We find that, under certain parametric restrictions, interconnection of the two markets reduces total welfare. The collusive horizon may extend from a single market to the overall integrated market. In such case, interconnection can be viewed as “exporting” collusion, rather than competition.

We analyse the effects of different regulatory schemes (price cap and profit sharing) on the endogenous size of a firm's investment. Using a real option approach in continuous time, we show that profit sharing does not delay a firm's start-up investment compared to a pure price-cap scheme. Profit sharing does not necessarily affect total investment either, if the threshold for profit sharing is high enough. Only a profit sharing intervening for low profit levels could delay further investments. We also evaluate the effects of profit sharing on social welfare, determining profit level that should optimally trigger tighter regulation: profit sharing should be less stringent in sectors where there is more opportunity for larger investment.

When price-cap rules determine the structure of prices for a long period, they suffer a credibility problem and introduce an element of risk especially if a firm’s profits are “too large”. Profit sharing may be seen as a device to pre-determine price adjustments and thus to decrease regulatory risk. We analyse the effects of profit sharing on the incentives to invest, using a real option approach. Absent credibility issues, a well designed profit sharing system may be neutral relative to a pure price cap. With regulatory risk, profit sharing is preferable to a pure price-cap one, if it intervenes for high enough profit levels.

This paper studies the effects of regulatory constraints on firm's irreversible investment decisions. The RPI−x rule is compared to a profit sharing rule, which increases the x factor in case profits go beyond a given level.

In this paper we discuss a number of ways to define and measure the affordability of energy consumption, and we examine the emergence of fuel poverty in Italy in the period from 1998 to 2011. The paper examines the eligibility criteria for claiming the benefits available to support energy consumption for vulnerable families and it identifies the potential beneficiaries. The study assesses the appropriateness of the eligibility criteria by comparing the population targeted by the policy with the population actually living in fuel poverty. A simulation exercise, using the hypothetical scenario most likely to result in energy benefits being made available, shows that, regardless of the affordability index adopted, the provision of state energy benefits has little impact on fuel poverty.

In this paper, we discuss a number of ways to define and measure the affordability of energy consumption, and we examine the emergence of energy poverty in Italy in the period from 1998 to 2011. The paper examines the eligibility criteria for claiming the benefits available to support energy consumption for vulnerable families and it identifies the potential beneficiaries. The study assesses the appropriateness of the eligibility criteria by comparing the population targeted by the policy with the population actually facing affordability problems. A simulation exercise, using the hypothetical scenario most likely to result in energy benefits being made available, shows that, regardless of the affordability index adopted, the provision of state energy benefits has little impact on fuel poverty.

Restructuring firms in a transition economy produces a sort of network externality, in that the profitability of restructuring depends on the number of firms that already adopted this strategy. We investigate under what conditions a `critical mass’ exists, i.e. a situation in which such externality is positive, and restructuring spurs imitation, possibly leading to the eventual transformation of the whole economy. We find a critical mass effect when the main effect of restructuring is an increase in value added (i.e., aggregate demand) rather than an increase in the firm's ability to compete against rival home firms. The critical mass case becomes the typical one when competition spurs firms’ efficiency.

This paper investigates how the ownership and the procedure for the selection of firms operating in the local public transport sector affect their productivity. In order to compare different institutional regimes, we carry out a comparative analysis of 72 companies operating in large European cities. This allows us to consider forms selected either through competitive tendering or negotiated procedures. The analysis of the data on 77 European firms over the period 1997-2006 indicates that firms operate under constant returns to scale. Retrieving the residuals we obtain a measure of total factor productivity, which we regress on firm and city characteristics. We find that when firms are totally or partially in public hands their productivity is lower. Moreover, firms selected through competitive tendering display higher total factor productivity. productivity.

We show that in a mixed duopoly under quantity competition, the public firm's reaction function may be upward sloping. This is the case under concavity of the demand function when the public firm attaches private profits a smaller weight than its own profits.

Using an original database for the 1992–2008 period, we investigate the determinants of state aid to the automotive industry in the European Union (EU). We find evidence that EU policies have been effective in reducing state aid and re-orienting it toward horizontal objectives. However, national politics still have considerable relevance. During election years, governments are more generous, and this is particularly true in EU countries with proportional representation. Finally, a strategic game between countries seems to take place, whereby a country’s decision to grant aid seems to be responsive to aid previously granted by other member states.

This paper examines retail competition in a liberalized gas market. Vertically integrated firms run both wholesale activities (buying gas from the producers under take-or-pay obligations) and retail activities (selling gas to final customers). The market is decentralized and the firms decide which customers to serve, competing then in prices. We show that TOP clauses limit the incentives to face-to-face competition and determine segmentation and monopoly pricing even when entry of new competitors occurs. The development of wholesale trade, instead, may induce generalized entry and retail competition. This equilibrium outcome is obtained if a compulsory wholesale market is introduced, even when firms are vertically integrated, or under vertical separation of wholesale and retail activites when firms can use only linear bilateral contracts.

The competitive advantages of the ‘size’ of an organization is still a highly controversial topic within economics research. In this short paper, we try and analyze the role of organization size within an industry such as financial services. We show in a simple theoretical model that both small and large organizations have particular advantages in competition.

This paper develops the idea that industry regulation can be treated as a bargaining between a firm and the public authority, and illustrates some consequences of this formulation. The author investigates a typical regulatory problem where a firm chooses a cost-reducing investment before price is subject to regulation. In a standard scheme, investment will be lower than required by efficiency. If the possibility of negotiation is taken into account, the author then shows that this undercapitalization result can be reversed. Indeed, with sunk costs excessive capitalization can be observed. Copyright 1994 by Royal Economic Society.

We examine the issue of whether two monopolists which produce substitutable goods should be regulated by one (centralization) or two (decentralization) regulatory authorities, when the regulator(s) can be partially captured by industry. Under full information, two decentral- ized agencies - each regulating a single market - charge lower prices than a unique regulator, making consumers better off. However, this leads to excessive costs for the taxpayers who subsidize the Â…rms, so that centralized regulation is preferable. Under asymmetric informa- tion about the firms' costs, lobbying induces a unique regulator to be more concerned with the industry's interests, and this decreases social welfare. When the substitutability between the goods is high enough, the firms'lobbying activity may be so strong that decentralizing the regulatory structure may be social welfare enhancing.

This paper investigates how the ownership and the procedure for the selection of firms operating in the local public transport sector affect their productivity. In order to compare different institutional regimes, we carry out a comparative analysis of 72 companies operating in large European cities. This allows us to consider firms selected either through competitive tendering or negotiated procedures. The analysis of the data on 77 European firms over the period 1997-2006 indicates that firms operate under constant returns to scale. Retrieving the residuals we obtain a measure of total factor productivity, which we regress on firm and city characteristics. We find that when firms are totally or partially in public hands their productivity is lower. Moreover, firms selected through competitive tendering display higher total factor productivity.

Schmalensee (1982) was the first to show in a formal model how a pioneering brand can retain a large market share because in a world of quality uncertainty, consumers may be unwilling to try new brands. Conrad (1983) has analyzed this idea further, in a more realistic competitive environment setting, and in a price leadership model of post entry behavior. The purpose of this note is to examine the effect of such pioneering brand advantages, or market dominance, when there is a technological change that affects product quality.

In this article we point out that one of the main problems in foreign aid allocation is the efficient use of these funds: as resources available for foreign aid are intrinsically scarce, their efficient use would be in the interest of donors, and especially recipient countries. The aim of this paper is to show how it is possible to design incentive schemes which, by relating the allocation of aid to the way it is used, may induce the recipient country to use these resources appropriately. We discuss potential benefits and problems of different contractual forms, showing how comparing the performances of different countries may help to design optimal incentive mechanisms. Finally, we illustrate a proposal of performance conditioning of the grant element, which may help in tackling the efficiency problem.

We study the regulation of a firm which supplies a regulated service while also operating in a competitive, unregulated sector. If the firm conducts its activities in the two markets jointly, it enjoys economies of scope whose size is the firm’s private information, unknown either to the regulator or to the rival firms. We characterize the unregulated market outcome (with price and quantity competition) and optimal regulation that involves an informational externality to the competitors. Although joint conduct of the activities generates scope economies, it also entails private information, so that regulation is less efficient and the unregulated market too may be adversely affected. Nevertheless, we show that allowing the firm to integrate productions is (socially) desirable, unless joint production is characterized by dis-economies of scope.

1959 wurde Carlo Scarpa mit der Restaurierung des Palazzo Querini Stampalia beauftragt, einem zweiteiligen Gebaude aus dem 16. Jahrhundert am Campo Santa Maria Formosa.199 Der sudliche Bau, dessen Erdgeschos von Scarpa restauriert und umgebaut wurde, entspricht dem venezianischen Typus der casa-fontego. Er besteht aus einem grosen, zwischen Kanal und Hof durchbindenden Raum (androne) und den porteghi im ersten und zweiten Stock daruber. Die flankierenden Raume zu beiden Seiten des Portego waren beheizbar und dienten zu Wohnzwecken, wahrend die Raume im Erdgeschos neben dem Androne unbewohnbar waren und als Lager genutzt wurden. Vor seinem Tod 1869 hatte Conte Giovanni Querini Stampalia verfugt, dass der Palazzo und seine Kunstsammlung als Stiftung wissenschaftlichen Zwecken dienen sollten. Es gab eine Bibliothek im ersten und eine Gemaldegalerie im zweiten Geschos. Das Erdgeschos konnte nicht genutzt werden und war in einem sehr schlechten Zustand, da es bei Hochwasser immer wieder uberflutet wurde. Scarpas Aufgabe bestand darin, ebendiesen Bereich zu restaurieren und fur Ausstellungen nutzbar zu machen.200

This paper studies the optimal behavior of a monopolist in the presence of asymmetric information cencerning the characteristics of the good he produces.

In this paper, we analyse some distributional effects of the reforms to water and energy services in Italy. We first document the new regulation setting in these services, illustrating the dynamics of utility prices and of household expenditure in the period 1998-2005. We then propose a way to measure the affordability of public utilities, in order to investigate how many households would incur a potentially excessive burden if they consumed a minimum quantity of utility services. Finally, we calculate this index on data from the Survey on Family Budgets (Indagine sui consumi delle famiglie). Our results show how the affordability of utility bills varies from region to region depending on climate, income, family endowment and family size. The analysis - also based on a counterfactual exercise - finds that so far, utility reforms do not seem to have produced any negative effects on weaker households.

We analyze the design of optimal regulation of a domestic monopolist that also competes in an unregulated foreign market. We show how foreign activities by the regulated firm affect domestic regulation, consumers’ surplus and firm’s profits. Although expansion in unregulated foreign markets amplifies the regulatory distortions that are caused by the regulator’s limited information, we also show that allowing the firm to compete abroad does not necessarily harm domestic consumers and we analyze if and when the firm’s decision to expand abroad does in fact coincide with consumers’ interests in the regulated market.

This paper examines competition in the liberalized natural gas market. Each .firm has zero marginal cost core capacity, due to long term contracts with take or pay obligations, and additional capacity at higher marginal costs. The market is decentralized and the firms decide which customers to serve, competing then in prices. In equilibrium each .firm approaches a different segment of the market and sets the monopoly price, i.e. market segmentation. Antitrust ceilings do not prevent such an outcome while the separation of wholesale and retail activities and the creation of a wholesale market induces generalized competition and low margins in the retail segment.

We study the regulation of a multi-utility, i.e. a utility firm that is also active in a competitive, unregulated sector. If the firm conducts its activities in the two markets jointly, it enjoys economies of scope whose magnitude is the firm's private information, unknown either to the regulator or to the rival firms. We characterize the unregulated market outcome (with price and quantity competition) and optimal regulation that involves an informational externality to the multi-utility's rivals. Although joint conduct of multi-utility's activities generates scope economies, it also brings private information to the multi-utility, so that regulation is less efficient and the unregulated market too may be adversely affected. Nevertheless, we show that allowing the multi-utility to integrate productions is (socially) desirable, unless joint production is characterized by dis-economies of scope.

Theory is not ambiguous about the impact of competition on economic performance. Empirical evidence, however, suggests that competition raises productivity. Both policy-makers and the academic community agree that the benefits of competition outweigh any eventual costs. Competition boosts the incentives for innovation and raises productivity growth of firms via the process of entry and exit.

This chapter concentrates on the reform opportunities that emerge when a government exploits its parliamentary majority. For example the privatizations and pension reforms carried out in the UK by the Thatcher government. When backed by a large parliamentary majority, the policy-makers' only constraint is the need to win a future election, which provides freedom of action in most cases. Yet, this strategy is not always valuable. The mix of successes and failures suggests that other institutional elements are crucial, such as the (lack of) internal cohesion in coalition governments or the existence of strong opposition. A strong parliamentary majority can thus be insufficient to generate sufficient coalition building.

This chapter discusses an alternate strategy that policy-makers tend to use when they do not enjoy sufficiently strong political power, and when they address reforms in broad-reaching sectors that affect a large fraction of the population. In the absence of a large parliamentary majority or in the presence of strong opposition in the economic or social arena, policy-makers widen the political base for their reform by resorting to social dialogue and to a more consensual style. The need to gather wider social and political support induces policy-makers to increase the share of winners from the reform, while raising expenses for the losers.

This chapter analyses reform over time across countries and sectors. Four scenarios for reforms are identified. In a scenario characterized by strong concentration of power in the hands of the policy-makers, a reform attempt in markets that do not feature entrenched interests may be carried out by exploiting this political power. Policy-makers lacking a substantial concentration of power can instead adopt a consensus building strategy to reform by tailoring the reform package to widen the political base. In the presence of strong entrenched interests, when some specific groups are both too strong to be confronted at once and too expensive to buy out, policy-makers may adopt a strategy of divide and conquer. In several circumstances, the reform efforts of policy-makers are largely affected by the existence of international laws or regulations that make reforms inescapable. Almost regardless of their political power and of the market or institution to be modified, the policy-maker may exploit these external constraints to carry out the reform.

The tertiary sector is increasingly playing a larger role in the economy, particularly in advanced countries. This chapter documents the growing linkages of the service sector with the rest of the economy and how liberalization has contributed to increasing such linkages. Input-output analysis is used to uncover the links between the tertiary sector and the rest of the economy. The tertiary sector is defined in a fairly broad manner by excluding only manufacturing, mining, agriculture, and construction.

This introductory chapter begins with a brief discussion of the main focus of the book, namely structural reforms in the product and labour markets, and the method adopted in the analysis of structural reforms. It then considers the relevant interactions among institutions and the question of whether these interactions can be exploited to obtain political support for reforms. Government exploitation of labour market reforms and the delegation of power to supranatural authorities are also discussed.

This chapter takes a different angle on policy-making by recognizing that several successful reforms were actually implemented under pressure from external constraints. Although strong governments may prefer to be free to select their reform options, governments facing strong opposition may need to rely on external constraints to increase their bargaining power in the coalition building phase and to limit the opposition of lobby groups. The recipe provided in this chapter is hence to exploit external constraints, such as those imposed by World Trade Organization (WTO) rules, the Stability Pact, or International Monetary Fund (IMF) conditionality rules. The chapter concentrates on the reform experience of two transition countries — the Czech Republic and Ukraine — to highlight the role of commitment to reform provided by a truly external constraint; in this case, the European Union.

This chapter considers instances in which widening the political base for reform may still be desirable, but is practically unfeasible. This scenario typically emerges when the benefits from reform are dispersed among many economic agents, postponed to future generations, or are highly uncertain — as, for example, with the liberalization of a ‘strategic’, traditionally highly regulated market — where costs are highly visible and relatively concentrated. Since buying out the opposition of vested interests is too costly or would largely limit the scope for reform, policy-makers must resort to a different strategy. The recipe adopted by successful policy-makers — particularly when liberalizing nonmanufacturing industries — is to ‘divide and conquer’. This strategy aims at disentangling entrenched vested interests by concentrating the costs of the reform on particular groups.

The case studies of Germany, Italy, and the UK show that liberalization has had positive direct effects on productivity in services, but does not always result in declining prices and employment gains. Liberalization seems to have positive effects on productivity, which — almost invariably because excessively high levels of employment are reduced — increases in all cases where its measurement is possible and reliable. Productivity may even increase well before privatization and liberalization, in anticipation of an increasingly competitive environment.

Dismantling the dominant position of an incumbent firm is a daunting task. Liberalization is a difficult process that many European countries have implemented only as a consequence of Directives coming from the European Commission, suggesting that EU institutions which are further away from local specific interests tend to be more market-oriented than national governments. Political commitment to reform is key to its implementation. The reform of the energy, telecommunications, and railway industries; professional services, retailing, postal services, and water are discussed.

This chapter illustrates how regulation in services affected the performance of other sectors in the economy through input-output linkages. The analysis compares the performance of twenty-four non-service (mostly manufacturing) industries in Germany, Italy, and the UK. It is shown that regulation, however measured, has a negative impact on foreign direct investment (FDI).

Competition in public utility sectors has been encouraged in recent years throughout Europe. In this paper we try and analyse the welfare effects of these reforms in Italy, with particular attention to water and energy goods. The first step is to introduce a sensible measure of affordability of public utilities and to see how many households fall below a critical threshold. This issue is analysed stressing how climatic conditions dramatically affect households’ expenditure and how the affordability of utility bills varies a lot from region to region. So far, utilities’ reforms do not seem to have produced negative effects on the weaker group of households.