The network contract

Chiara Bentivogli, Fabio Quintiliani () and Daniele Sabbatini ()
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Daniele Sabbatini: Banca d'Italia

No 152, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper studies costs and benefits of firm networks, and related industrial policies, with a focus on the �network contract� recently introduced in the Italian legislation. Incentives to networks creation could be useful to foster future mergers, but may prove ineffective as a substitute for firms� growth. The network contract is a comparatively more flexible instrument, but its potential is hindered by the indeterminacy of its contents: some standardization would be beneficial. The contract adds to a plethora of incentives that distort firms� choices. Members of a network contract have often a pre-established relationship, and are located in classical marshallian industrial districts. One novel aspect is that sometimes partner firms are located in faraway regions. Probit regressions show: i) the probability of entering a network contract increases with firm�s size and growth; this shows that the network does not seem to be the solution to small size problems; ii) the degree of leverage does not discriminate between firms in networks and the others.

Keywords: firms� networks; firm size (search for similar items in EconPapers)
JEL-codes: K00 L14 L23 (search for similar items in EconPapers)
Date: 2013-02
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Citations: View citations in EconPapers (1)

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