Paolo Bertoletti

University of Pavia, Ticinum, Lombardy, Italy

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Publications (21)3.4 Total impact

  • Paolo Bertoletti, Federico Etro
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    ABSTRACT: We study monopolistic competition under indirect additivity of preferences. This is dual to the Dixit-Stiglitz model, where direct additivity is assumed, with the CES case as the only common ground. Other examples include (perceived) demand functions that are exponential or linear. Our equilibrium results are generally in contrast with those received by the literature. An increase of the number of consumers never affects prices and firms' size, but increases proportionally the number of firms, creating pure gains from variety. An increase in individual income increases prices (and more than proportionally the number of varieties) and reduces firms' size if and only if the price elasticity of demand is increasing. We also study the endogenous market structure with Bertrand competition (in which a pro-competitive effect of market size arises) and the case for inefficient entry.
    04/2013;
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    Paolo Bertoletti, Clara Poletti
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    ABSTRACT: We analize a market in the process of liberalization. Consumers are biased in favor of the incumbent firm and we assume that they can discover the true value of new suppliers only by switching. In an infinitely repeated game setting with Bertrand competition, we first show that efficient entry might not take place. We then evaluate the effect of organizing a public auction for assigning consumers to a “default supplier” and show that such a mechanism (which respects the freedom of choice by consumers) would support entry efficiency. However, auctioning might also increase inefficient, although temporary, entry.
    01/2012;
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    Paolo Bertoletti, Giorgio Rampa
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    ABSTRACT: A necessary and sufficient condition for an input to be inferior is that, taking into account the input adjustment, an increase of its price raises the marginal productivity of all inputs. Contrary to a widespread opinion, it is not necessary that (some) inputs are “rivals” (i.e., that some marginal productivity cross derivative is negative). We discuss these facts and illustrate them by introducing a few simple functional forms for the production function. Our results suggest that the existence of inferior inputs is naturally associate to the presence of increasing returns, and possibly make the case for inferiority considerably stronger.
    Journal of Economics 01/2011; 109(3). · 0.58 Impact Factor
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    Paolo Bertoletti
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    ABSTRACT: We argue that the output criterion for price discrimination is not robust to the introduction of even arbitrarily small marginal cost differences. However, welfare improvements can be validly assessed by replacing it with the computation of well-known price indexes which are not informatively more demanding.
    Economics Bulletin. 01/2009; 29(4):2951-2956.
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    Paolo Bertoletti, Eileen Fumagalli, Clara Poletti
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    ABSTRACT: We introduce a new class of "increasing elasticity of substitution" (IES) preferences to model product differentiation. In a monopolistic competition setting a la Dixit - Stiglitz (1977) we find that, even under constant returns to scale and complete information, a rise in the number of firms can be price-increasing. This result extends to Cournotian competition. Despite the price increase, consumers benefit from a rise in the number of monopolistic competitors because of higher product diversity. Higher prices are therefore associated with higher consumer welfare. Our results suggest a possible explanation to the empirical puzzle posed by the countercyclical movements of price-cost margins following globalisation and market reforms. In addition, they should be of interest for real business cycle literature which investigates the impact of an endogenous market structure.
    10/2008;
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    Paolo Bertoletti
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    ABSTRACT: The Exclusion Principle [Baye, M.R., Kovenock, D., de Vries, C.G., 1993. Rigging the lobbying process: an application of the all-pay auction. American Economic Review 83, 289-294] asserts that, in an all-pay auction with fully informed participants, it might be profitable for the seller to exclude those bidders whose valuations are the largest. Menicucci [Menicucci, D., 2006. Banning bidders from all-pay auctions. Economic Theory 29, 89-94] shows that banning (ex ante symmetric) bidders can raise expected revenue also in a setting in which the seller regards valuations as identically and independently distributed. We prove that the latter occurrence cannot arise if valuations are distributed according to a monotonic hazard rate.
    Journal of Mathematical Economics 01/2008; 44(11):1215-1218. · 0.32 Impact Factor
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    Paolo Bertoletti
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    ABSTRACT: We study a class of quasi-homothetic preferences, which result in demands that are logarithmic in own prices when these have a negligible impact on aggregate prices (as in monopolistic competition models). Thus marginal revenues are computationally friendly and well behaved.
    Economics Letters. 02/2006; 90(3):433-439.
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    Paolo Bertoletti
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    ABSTRACT: We show that the seller’s optimal reserve price in an all-pay auction with complete information is higher than in a standard auction. We use our results to re-consider some findings of the literature that models lobbying games as all-pay auctions. In particular, we show that the so-called Exclusion Principle appears to rely crucially on the implicit assumption of a “weak” (in terms of bargaining power) seller, and does not hold if she regards bidders’ valuations as iid according to a monotonic hazard rate. Our preliminary results for the case of independent but asymmetric bidders make it even more suspicious.
    02/2006;
  • Paolo Bertoletti
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    ABSTRACT: We derive the relationships between the net and gross elasticities of substitution and complementarity (i.e., the elasticities that refer either to the conditional or unconditional, direct or inverse demand system) in the general case of non-homothetic, variable-returns-to-scale technologies. We also show that the so-called Hicks Elasticity of Complementarity (Hicks, Oxford economic Papers 22, 289–296 (1970)) is dual to a full-fledged elasticity of gross input substitution that we call the Hotelling/Lau Elasticity of Substitution (Lau, Production Economics: A Dual Approach to Theory and Applications. Amsterdam: North-Holand (1978)). The former is, in fact, the proper elasticity of substitution in the case of the inverse, unconditional input demand. Our results should clarify some issues about the input substitutability classification. Copyright Springer Science+Business Media, Inc. 2005
    Journal of Productivity Analysis 02/2005; 24(2):183-196. · 0.87 Impact Factor
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    Guido Ascari, Mario Menegatti, Paolo Bertoletti
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    ABSTRACT: We consider a simple, self-financing and informationally undemanding scheme to reduce the deadweight loss due to a monopolist's market power. Essentially, we propose taxing the monopolist and applying the tax revenue to generate a public demand for his output. It turns out that a favorable scenario for such a reform to generate an ‘efficiency increase’ (i.e. to increase total output) is an elasticity of market demand with an absolute value of less than 3 (a seemingly ‘realistic’ condition). We also consider the case for the implementation of the first best, and compare specific and ad-valorem taxes as a way to finance the public demand.
    Research in Economics. 02/2005; 59(4):321-334.
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    Paolo Bertoletti
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    ABSTRACT: En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamientos, muchos abogan por una conjunci�n de medidas tanto restrictivas como alternativas al uso del coche. Dentro de las primeras se encuentra el establecimiento de un peaje o una tarifa por el uso de las carreteras, medida que aunque desde el punto de vista de la Teor�a Econ�mica es la manera m�s eficiente para corregir el fallo de mercado que supone la congesti�n, desde la visi�n de pol�ticos y del p�blico no goza de gran aceptaci�n. En este trabajo se pretende hacer una simulaci�n de los efectos que tendr�a sobre el bienestar social de la implantaci�n de una medida de este tipo en la Bah�a de C�diz. In the European Union it has been estimated that the congestion cost are the 2% of the gross domestic product and the cost of pollution and noise is over 0,6%, olso it is known that the 90% of this cost are caused by overland transport. For this reason and for the always increasing demand of private transport, there are professionals who thinks that the solution have to be restrictive measures added to alternatives to the car. road pricing is a restrictive measures that for the economic theory is the most efficient way to solve congestion cost but for politicians and user of transport is not always accepted. In this study we are going to simulate road pricing for commuters in the Bah�a of C�diz and then it will be estimated welfare effects.
    University Library of Munich, Germany, MPRA Paper. 01/2005;
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    PAOLO BERTOLETTI
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    ABSTRACT: It is known that monopolistic third-degree price discrimination decreases aggregate welfare if total output falls. In contrast to Adachi (this Journal, 2002), this note shows that welfare must decrease under price discrimination even if total output remains constant.
    01/2004;
  • Paolo BERTOLETTI
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    ABSTRACT: The Allen/Uzawa elasticity of substitution, still commonly used in the empirical studies to account for "net" substitutability, has been subject to a number of theoretical criticisms. In this paper we reconsider the Allen/Uzawa elasticity of substitution as a measure of "gross" substitutability, and show that to this relevant purpose it can be meaningfully interpreted in conjunction with the returns-to-scale properties of the technology.
    Rivista Italiana degli Economisti. 01/2001; 6(1):87-94.
  • Paolo Bertoletti, Clara Poletti
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    ABSTRACT: Tariff discrimination by a regulated monopolist is sometimes politically unfeasible on distributional grounds. However, under a simple regulatory constraint, discriminatory two-part tariffs provide a Pareto improvement. This suggests an implementable reform of the uniform tariff used in some public utilities.
    Economics Letters. 02/1997; 56(3):293-298.
  • Paolo Bertoletti, Clara Poletti
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    ABSTRACT: Whether competition forces firms toward efficient behavior is an open question. The authors consider a duopoly with firms run by managers and affected by adverse selection on costs. In contrast to recent literature, they point out that, to have a genuine effect on firm X-inefficiency, competition must change managerial incentives. By introducing the availability of some signal on the rivals' behavior, the authors show that, if costs are correlated, the contractual use of that signal can render private managerial information uninfluential. This result stresses the informational role of the market and suggests scope for future work. Copyright 1997 by Blackwell Publishing Ltd
    Journal of Industrial Economics 01/1997; 45(4):359-75. · 1.04 Impact Factor
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    Paolo Bertoletti, Clara Poletti
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    ABSTRACT: Martin models Cournot firms with informational asymmetries on costs to investigate the relation betweenX-inefficiency and the number of firms. He argues that an increase in the number of competitors decreases firm efficiency. We show that his results hold in a complete information model: they are due to the implicit assumption of increasing returns to scale. We further argue that a setting of adverse selection on cost and of ex post cost observability tends to isolate the intrafirm agency problem from what happens inside the product market, leaving firm efficiency unaffected by the degree of competition.Journal of Economic LiteratureClassification Numbers: L13, L22, D82.
    Journal of Economic Theory. 02/1996; 71(1):303-310.
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    Paolo Bertoletti
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    ABSTRACT: We introduce reserve prices in the literature conce rning all-pay auctions with complete information, and reconsider the case for t he so-called Exclusion Principle (namely, the fact that the seller may fin d it in her best interest to exclude the bidders with the largest willingness to pay for the prize). We show that a version of it extends to our setting. Howeve r, we also show that the Exclusion Principle: a) does not apply if the reser ve price is large enough; 2) does not extend if the seller regards bidders' valu ations as identically independently distributed according to a monotonic hazard rate. Preliminary results for the case of independent ex-ante asymmet ric bidders suggest that the case for it in settings with positive reserve price s is actually tenuous.
  • P. Bertoletti, E. Fumagalli, C. Poletti
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    ABSTRACT: We introduce a new class of "increasing elasticity of substitution" (IES) preferences to model product differentiation. In a monopolistic co mpetition setting à la Dixit - Stiglitz (1977) we find that, even under constant returns to scale and complete information, a rise in the number of firms can be price-increasing. Thi s result extends to the case of Cournotian competition. Despite the price increase, consumers benefit from a rise in the number of monopolistic competitors because of higher product diversity. Higher prices are therefore associated with higher consumer welfa re. Our results suggest a possible explanation to the empirical puzzle posed by the co untercyclical movements of price-cost margins behaviour following globalisation and market reforms. In addition, they should be of interest for the real business cycle literatu re which investigates the impact of an endogenous market structure.
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    PAOLO BERTOLETTI
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    ABSTRACT: Exploiting the duality between the production and the profit function, it is shown that the so-called Hicks Elasticity of Complementarity is perfectly dual to a full-fledged elasticity of gross substitution. It is thus the proper elasticity of substitution in the case of the inverse, unconditional input demand. We use this duality to derive the relationships between the net and gross elasticities of substitution and complementarity (i.e., the elasticities that refer either to the conditional or unconditional, direct or inverse demand system) in the general case of non-homothetic technologies with variable returns to scale. The results should help clarify some issues in the running discussion of input substitutability classification.
  • Paolo Bertoletti, Pierre von Mouche
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    ABSTRACT: We reconsider the recent work by Okuguchi (J Econ 101:125–131, 2010) on (possibly asymmetric) Cournotian firms with two production factors, one being inferior for each firm. It is shown there that an increase in the price of the inferior factor does raise the equilibrium industry output. In addition of providing a simpler and more rigorous proof of that result, we generalize it to the case of technologies with $s\ge 2$ factors and also allow some firms not to use the inferior one.
    Journal of Economics · 0.58 Impact Factor