Incomplete Regulation, Competition, and Entry in Increasing Returns to Scale Industries

Increasing Returns, Imperfect Competition and Factor Prices

We show how, in general equilibrium models featuring increasing returns, imperfect competition and endogenous markups, changes in the scale of economic activity affect income distribution across factors. Whenever Þnal goods are gross-substitutes (grosscomplements), a scale expansion raises (lowers) the relative reward of the scarce factor or the factor used intensively in the sector characteriz...

Capacity Utilization under Increasing Returns to Scale

Competition and Increasing Returns to Scale: A Model of Bank Size

This paper examines the causal e¤ects of bank size on banks’ survival, asset quality, and leverage. Two forces drive these e¤ects: increasing returns to scale derived from banks’expertise; and competition. The …rst enables bigger banks to survive competition better, have higher asset-quality, and be more leveraged. It drives banks into a race for expansion. This race toughens competition betwee...

Competition, Regulation, and Efficiency in Service Industries

IN THIS PAPER I examine the regulatory and competitive environments in which four service industries operate in Europe and Japan, suggesting how certain types of regulation and the lack of adequate competition reduce productivity. I then present estimates of the relative productivities of these industries compared with the United States and suggest that in practice, the differences in the compe...

Indeterminacy, Business Cycles, and Modest Increasing Returns to Scale

In this paper a dynamic model of monopolistic competition with entry and exit has been presented and examined. It is shown that the model displays indeterminacy at modest degrees of increasing returns in cases where the market power in the consumption goods market and in the investment goods market diiers. Furthermore, the model is quite successful in replicating major U.S. business cycle facts...