Productivity drivers of infrastructure companies: network industries to maximize economies of scale in the digital era

Ryota Nakatani

MPRA Paper from University Library of Munich, Germany

Abstract: What drives the productivity dynamics of infrastructure companies? Using a panel of firms in fourteen countries, we study total factor productivity (TFP) enhancers of utility and network services companies. We find that the catching up of TFP with 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 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, the policies should remove entry barriers while facilitating the exit of old and low-productivity firms from the 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.

Keywords: total factor productivity; utility and network services; infrastructure companies; energy industry; transportation industry; (dis)economies of scale; financial leverage; intangible assets (search for similar items in EconPapers)
JEL-codes: D24 E22 G38 L25 L87 L9 O34 (search for similar items in EconPapers)
Date: 2022-12-03
New Economics Papers: this item is included in nep-eff, nep-ene, nep-reg, nep-sea and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/115531/1/MPRA_paper_115531.pdf original version (application/pdf)

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:pra:mprapa:115531

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().