EconPapers    
Economics at your fingertips  
 

Productivity drivers of infrastructure companies: Network industries utilizing economies of scale in the digital era

Ryota Nakatani

Annals of Public and Cooperative Economics, 2023, vol. 94, issue 4, 1273-1298

Abstract: What drives the productivity dynamics of infrastructure companies? Using a panel of firms in 14 countries, we study total factor productivity (TFP) enhancers of utility and network services companies. We find that moving TFP closer to the technological frontier drives productivity growth at higher speeds in Asian countries than in European countries. We also find that financial leverage exerts a positive effect on TFP growth for larger infrastructure firms and that more financially developed countries utilize economies of scale through better use of financial resources. Large utility and transportation companies display a higher rate of TFP growth, indicating that a competition policy to encourage M&As would be prudent for the utility/transportation sectors to maximize economies of scale. In contrast, we find diseconomies of scale for energy companies in some countries. Moreover, young network firms improve TFP growth faster than their peers in countries with fewer product market regulations. Therefore, policies should remove entry barriers while facilitating the departure of old and low‐productivity firms from network markets. Finally, policymakers should offer well‐targeted fiscal incentives for intangible investments to boost TFP because the accumulation of intangible assets such as digital technology promotes more scale economies through network effects.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://doi.org/10.1111/apce.12412

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:annpce:v:94:y:2023:i:4:p:1273-1298

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1370-4788

Access Statistics for this article

Annals of Public and Cooperative Economics is currently edited by Marco Marini

More articles in Annals of Public and Cooperative Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2024-12-28
Handle: RePEc:bla:annpce:v:94:y:2023:i:4:p:1273-1298