| Many branches of economic literature deal with increasing returns in production. We focus on three aspects of this phenomenon.; The first chapter contributes to the General Equilibrium literature without the convexity assumption on production set. This literature has pointed out a source of (first best) inefficiency that the partial equilibrium literature ignored: even if first best regulation can be implemented, the resulting allocation may lay inside the Pareto frontier unless the initial income distribution is modified. We focus on a fixed cost economy and provide two original results to overcome this problem: first, we show that an efficient two-part tariff equilibrium exists under an assumption weaker than the one previously used by the literature. Furthermore, we extend a similar argument to prove the existence of an efficient marginal cost pricing equilibrium, if the initial allocation is efficient in the exchange.; The second chapter approaches the problem of fixed costs in a partial equilibrium framework. Previous papers have pointed out that, in presence of fixed costs, free entry in the market could lead to inefficient (excessive) entry, due to replication of fixed costs. The assumption of a unique equilibrium made by the earlier contributions is indeed very restrictive and a multiplicity of equilibria has to be expected; multiple equilibria, however, bring about an additional source of inefficiency due to entry. We present an original model in which the fixed costs are (completely) shared by all the firms active in the market. We prove that in this context both the inefficiencies discussed above are resolved. Finally a counterexample shows that deep inefficiencies, due to multiplicity of equilibria, arise in presence of a small fraction of replicable (sunk) costs.; The third chapter presents the case of an industry, telecommunications, in which the natural monopoly is strictly related to the nature of the service. In this context we analyze the impact of cellular phones on the telecommunication markets in the OECD member countries. The empirical results about the determinants of diffusion of mobile phones show that both market factors as well as regulatory constraints play a relevant role in determining an adoption path. |
