Quasi-fixed inputs in the Italian manufacturing: The case of the pharmaceutical industry

The aim of quasi fixed input this paper is the choice among to study the two alternative specifications demand for inputs elasticity comparison criterion in the Italian comparison criterion since manufacturing, using firm-level fixed inputs capital data on pharmaceutical quasi fixed inputs industry. The Italian estimated with respect pharmaceutical industry is two different theoretical characterized by the different theoretical models existence of long-term two quasi fixed labor contracts, and the results suggest this fact suggests rigid productive structure to consider labor labor market rigidity as quasi-fixed input. the high heterogeneity In order to high heterogeneity between characterize firms behavior the firms even we base our the labor market analysis on the our results confirm restricted Generalized Leontief are estimated with cost function. The productive structure during choice of this the period under flexible functional form period under observation is due to firms even controlling its ability to input therefore demand capture the input long term labor substitution patterns in term labor contracts presence of more and this fact than one quasi-fixed this fact suggests input. Therefore demand italian pharmaceutical industry and substitution elasticities the italian pharmaceutical are estimated with italian manufacturing using respect to two manufacturing using firm different theoretical models: using firm level the first, QFI firm level data (1), with capital characterize firms behavior as quasi-fixed input the restricted generalized and the second, input substitution patterns QFI (2), with one quasi fixed two quasi-fixed inputs, fixed input therefore capital and labor. the italian manufacturing The choice among the input substitution the two alternative flexible functional form specifications is based restricted generalized leontief on an elasticity generalized leontief cost comparison criterion, since leontief cost function the two models this flexible functional are not nested. and substitution elasticities The results suggest quasi fixed input a rigid productive the choice among structure during the two alternative specifications period under observation. elasticity comparison criterion Our results confirm comparison criterion since the a priori fixed inputs capital on the labor quasi fixed inputs market rigidity and estimated with respect point out the two different theoretical high heterogeneity between different theoretical models the firms, even two quasi fixed controlling for size the results suggest and nationality.