Essays in nonlinear pricing and rent seeking

This thesis consists of three self-contained essays on nonlinear pricing and rent-seeking. In the first chapter of the thesis, I provide new theoretical insights about non-linear pricing in monopoly and common agency by combining the principal-agent framework with other-regarding preferences. I introduce a new theoretical model that separately characterizes status-seeker and inequity-averse buyers. I show how the buyer’s optimal choice of quality and market inefficiency change when the buyer has other-regarding preferences. In the second chapter, I find the optimal productive rent-seeking and sabotaging efforts when the prize is endogenous. I show that due to the existence of endogeneity, sabotaging the productive rent-seeking efforts causes sabotaging the endogenous part of the prize, which can affect the rent-seeking efforts. Moreover, I introduce social preferences into my model and characterize symmetric productive rent-seeking and sabotaging efforts. In the last chapter, I propose a new theoretical model regarding information disclosure with Bayesian persuasion in rent-seeking contests when the efforts are productive. I show that under one-sided incomplete information, information disclosure decision depends on both the marginal costs of efforts and the marginal benefit of aggregate exerted effort. I find that since the efforts are productive and add a positive surplus on the fixed rent, my model narrows down the conditions for the information disclosure compared to the exogenous model. Under the two-sided incomplete information case, I observe that there is a non-monotone relationship between optimal effort and posterior beliefs. Thus, it might be difficult to conclude whether a contest organizer should disclose any information to contestants.

L’emergere del periurbano: il caso di Bologna

The rationale behind this piece of research is to study the movement of people from Bologna city centre to its outskirts and to find out what type of people are subject to move and the reasons for this: are they forced into or do they choose to do so? The present study will also consider how people commute from home to the city centre and the effect this has on them. For the purpose of this work, attention will be drawn to the possibility of these outer areas to develop in such a way that people will no longer need to commute to the city in order to recreate the advantages this offers to them (e.g. shops, job opportunities, ext). The theoretical framework this doctorial work is based upon concerns historical, urbanist, sociological and demographic approaches, along with the fact that the hegemony of the city centre has been benefiting has decreased. Historical centres and the central poles of metropolitan systems have lost their functional and symbolic relevance. More specifically, the Bologna Area is undergoing two tendencies: the first one is a process of residential decentralization from the capital town, capable of involving a plurality of social groups, which caused an enrichment of the social composition of "suburban" population. The second process is a partial substitution of the population in the city centre with new groups: this not only occurred with directional groups, but it has also interested new parts of the “service worker” class and members of metropolitan underclass, causing, consequentially, a growing complexity in central areas of the metropolitan system. The need to increase knowledge of Bologna territory has become more and more relevant, since the 70’s, when a series of important environmental transformations favoured a research interest that did not exclusively stopped within the city centre boarders, but rather encouraged the exploration of Bologna outer/suburban areas. Finally, in the urban/suburban discourse, this piece of research has highlighted how the search for a better quality of life (financial reasons, larger spaces, possibility to buy/rent for a better price, environmental issues) determines the choice to leave the centre of the city in favour of outer areas. The tendency that this doctorial work has brought to surface is the need to match a more manageable standard of living to the proximity to the city, despite the fact that this results in the stress caused to commuting and the lack of those cultural and entertaining facilities offered by the city. The new suburban inhabitants do not regret leaving the city, but, at the same time, do not feel emotionally attached to the new location at a community level: what they seem to look for is a more comfortable environment where to live in.

Regulating State Aid: Inter-jurisdictional competition, public choice, and corporate governance

Depending on the regulatory regime they are subject to, governments may or may not be allowed to hand out state aid to private firms. The economic justification for state aid can address several issues present in the competition for capital and the competition for transfers from the state. First, there are principal-agent problems involved at several stages. Self-interested politicians might enter state aid deals that are the result of extensive rent-seeking activities of organized interest groups. Thus the institutional design of political systems will have an effect on the propensity of a jurisdiction to award state aid. Secondly, fierce competition for firm locations can lead to over-spending. This effect is stronger if the politicians do not take into account the entirety of the costs created by their participation in the firm location race. Thirdly, state aid deals can be incomplete and not in the interest of the citizens. This applies if there are no sanctions if firms do not meet their obligations from receiving aid, such as creating a certain number of jobs or not relocating again for a certain amount of time. The separation of ownership and control in modern corporations leads to principal-agent problems on the side of the aid recipient as well. Managers might receive personal benefits from subsidies, the use of which is sometimes less monitored than private finance. This can eventually be to the detriment of the shareholders. Overall, it can be concluded that state aid control should also serve the purpose of regulating the contracting between governments and firms. An extended mandate for supervision by the European Commission could include requirements to disincentive the misuse of state aid. The Commission should also focus on the corporate governance regime in place in the jurisdiction that awards the aid as well as in the recipient firm.