Three Essays in Spatial Economics

This work contributes to the field of spatial economics by embracing three distinct modelling approaches, belonging to different strands of the theoretical literature. In the first chapter I present a theoretical model in which the changes in urban system’s degree of functional specialisation are linked to (i) firms’ organisational choices and firms’ location decisions. The interplay between firms’ internal communication/managing costs (between headquarters and production plants) and the cost of communicating with distant business services providers leads the transition process from an “integrated” urban system where each city hosts every different functions to a “functionally specialised” urban system where each city is either a primary business center (hosting advanced business services providers, a secondary business center or a pure manufacturing city and all this city-types coexist in equilibrium.The second chapter investigates the impact of free trade on welfare in a two-country world modelled as an international Hotelling duopoly with quadratic transport costs and asymmetric countries, where a negative environmental externality is associated with the consumption of the good produced in the smaller country. Countries’ relative sizes as well as the intensity of negative environmental externality affect potential welfare gains of trade liberalisation. The third chapter focuses on the paradox, by which, contrary to theoretical predictions, empirical evidence shows that a decrease in international transport costs causes an increase in foreign direct investments (FDIs). Here we propose an explanation to this apparent puzzle by exploiting an approach which delivers a continuum of Bertrand- Nash equilibria ranging above marginal cost pricing. In our setting, two Bertrand firms, supplying a homogeneous good with a convex cost function, enter the market of a foreign country. We show that allowing for a softer price competition may indeed more than offset the standard effect generated by a decrease in trade costs, thereby restoring FDI incentives.

Essays in Industrial Organization and Information Technology

Chapter 1 studies how consumers’ switching costs affect the pricing and profits of firms competing in two-sided markets such as Apple and Google in the smartphone market. When two-sided markets are dynamic – rather than merely static – I show that switching costs lower the first-period price if network externalities are strong, which is in contrast to what has been found in one-sided markets. By contrast, switching costs soften price competition in the initial period if network externalities are weak and consumers are more patient than the platforms. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Chapter 2 examines firms’ incentives to invest in local and flexible resources when demand is uncertain and correlated. I find that market power of the monopolist providing flexible resources distorts investment incentives, while competition mitigates them. The extent of improvement depends critically on demand correlation and the cost of capacity: under social optimum and monopoly, if the flexible resource is cheap, the relationship between investment and correlation is positive, and if it is costly, the relationship becomes negative; under duopoly, the relationship is positive. The analysis also sheds light on some policy discussions in markets such as cloud computing. Chapter 3 develops a theory of sequential investments in cybersecurity. The regulator can use safety standards and liability rules to increase security. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only firms, but also consumers to invest in security.

Non-Linear Pricing in Imperfectly Competitive Markets

This thesis is dedicated to the analysis of non-linear pricing in oligopoly. Non-linear pricing is a fairly predominant practice in most real markets, mostly characterized by some amount of competition. The sophistication of pricing practices has increased in the latest decades due to the technological advances that have allowed companies to gather more and more data on consumers preferences. The first essay of the thesis highlights the main characteristics of oligopolistic non-linear pricing. Non-linear pricing is a special case of price discrimination. The theory of price discrimination has to be modified in presence of oligopoly: in particular, a crucial role is played by the competitive externality that implies that product differentiation is closely related to the possibility of discriminating. The essay reviews the theory of competitive non-linear pricing by starting from its foundations, mechanism design under common agency. The different approaches to model non-linear pricing are then reviewed. In particular, the difference between price and quantity competition is highlighted. Finally, the close link between non-linear pricing and the recent developments in the theory of vertical differentiation is explored. The second essay shows how the effects of non-linear pricing are determined by the relationship between the demand and the technological structure of the market. The chapter focuses on a model in which firms supply a homogeneous product in two different sizes. Information about consumers' reservation prices is incomplete and the production technology is characterized by size economies. The model provides insights on the size of the products that one finds in the market. Four equilibrium regions are identified depending on the relative intensity of size economies with respect to consumers' evaluation of the good. Regions for which the product is supplied in a single unit or in several different sizes or in only a very large one. Both the private and social desirability of non-linear pricing varies across different equilibrium regions. The third essay considers the broadband internet market. Non discriminatory issues seem the core of the recent debate on the opportunity or not of regulating the internet. One of the main questions posed is whether the telecom companies, owning the networks constituting the internet, should be allowed to offer quality-contingent contracts to content providers. The aim of this essay is to analyze the issue through a stylized two-sided market model of the web that highlights the effects of such a discrimination over quality, prices and participation to the internet of providers and final users. An overall welfare comparison is proposed, concluding that the final effects of regulation crucially depend on both the technology and preferences of agents.

Integrazione di tecnologie non distruttive per la caratterizzazione di rocce ornamentali

ABSTRACT: The dimension stone qualification through the use of non-destructive tests (NDT) is a relevant research topic for the industrial characterisation of finite products, because the competition of low-costs products can be sustained by an offer of highqualification and a top-guarantee products. The synthesis of potentialities offered by the NDT is the qualification and guarantee similar to the well known agro-industrial PDO, Protected Denomination of Origin. In fact it is possible to guarantee both, the origin and the quality of each stone product element, even through a Factory Production Control on line. A specific disciplinary is needed. A research developed at DICMA-Univ. Bologna in the frame of the “OSMATER” INTERREG project, allowed identifying good correlations between destructive and non-destructive tests for some types of materials from Verbano-Cusio-Ossola region. For example non conventional ultrasonic tests, image analysis parameters, water absorption and other measurements showed to be well correlated with the bending resistance, by relationships varying for each product. In conclusion it has been demonstrated that a nondestructive approach allows reaching several goals, among the most important: 1) the identification of materials; 2) the selection of products; 3) the substitution of DT by NDT. Now it is necessary to move from a research phase to the industrial implementation, as well as to develop new ND technologies focused on specific aims.

Clinicopathologic findings in thoroughbred horses during a high speed – short term competition

The aim of this study was to examine whether a real high speed-short term competition influences clinicopathological data focusing on muscle enzymes, iron profile and Acute Phase Proteins. 30 Thoroughbred racing horses (15 geldings and 15 females) aged between 4-12 years (mean 7 years), were used for the study. All the animals performed a high speed-short term competition for a total distance of 154 m in about 12 seconds, repeated 8 times, within approximately one hour (Niballo Horse Race). Blood samples were obtained 24 hours before and within 30 minutes after the end of the races. On all samples were performed a complete blood count (CBC), biochemical and haemostatic profiles. The post-race concentrations for the single parameter were corrected using an estimation of the plasma volume contraction according to the individual Alb concentration. Data were analysed with descriptive statistics and the percentage of variation from the baseline values were recorded. Pre- and post-race results were compared with non-parametric statistics (Mann Whitney U test). A difference was considered significant at p<0.05. A significant plasma volume contraction after the race was detected (Hct, Alb; p<0.01). Other relevant findings were increased concentrations of muscular enzymes (CK, LDH; p<0.01), Crt (p<0.01), significant increased uric acid (p<0.01), a significant decrease of haptoglobin (p<0.01) associated to an increase of ferritin concentrations (p<0.01), significant decrease of fibrinogen (p<0.05) accompanied by a non-significant increase of D-Dimers concentrations (p=0.08). This competition produced relevant abnormalities on clinical pathology in galloping horses. This study confirms a significant muscular damage, oxidative stress, intravascular haemolysis and subclinical hemostatic alterations. Further studies are needed to better understand the pathogenesis, the medical relevance and the impact on performance of these alterations in equine sport medicine.