Specialization vs. Competition: An Anatomy of Increasing Returns to Scale

Capacity Utilization under Increasing Returns to Scale

An input-oriented radial measure for returns to scale aggregation.

In production theory, it is necessary to be capable of predicting the production func- tion’s long-run behaviors. Hereof, returns to scale is a helpful concept. Returns to scale describes the reaction of a production function to the proportionally scaling all its input variables. In this regard, Data envelopment analysis (DEA) provides a com- prehensive framework for returns to scale evaluation...

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...

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...

Increasing Returns to Scale, Price Dispersion, and the Distribution of Returns to Innovation

Models of endogenous growth have not been able to account for the variety of empirically observed distributional properties of the returns to innovation, in part, because of the limitations necessarily imposed on competition to cope with increasing returns to scale. Exponential growth, fat tails, Pareto–Levy distributed upper tails, and upper value outliers, are associated with increasing retur...