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Spatial Competition with Price-Taking Firms

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  • Anderson, Simon P
  • Engers, Maxim

Abstract

The authors consider a price-taking equilibrium in the spatial setting. A (unique) pricing equilibrium is shown to exist for any set of firm locations. This equilibrium is then used to examine locational incentives in the two-stage process in which firms first choose locations anticipating the subsequent price-taking outcome. The result is spatial agglomeration if demand is inelastic and there are only two firms. Agglomeration does not occur if demand is too elastic or if there are more than two firms. Copyright 1994 by The London School of Economics and Political Science.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 61 (1994)
Issue (Month): 242 (May)
Pages: 125-36

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Handle: RePEc:bla:econom:v:61:y:1994:i:242:p:125-36

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Cited by:
  1. Berliant, Marcus & Zenou, Yves, 2012. "Labor differentiation and agglomeration in general equilibrium," MPRA Paper 36207, University Library of Munich, Germany.
  2. Fabian Herweg, 2007. "Can price discrimination lead to product differentiation? A vertical differentiation model," Bonn Econ Discussion Papers bgse2_2007, University of Bonn, Germany.
  3. repec:ltr:wpaper:2000.11 is not listed on IDEAS
  4. Xiangkang Yin, 2000. "Two-part tariff competition in duopoly," Working Papers 2000.11, School of Economics, La Trobe University.
  5. Ricardo Biscaia & Isabel Mota, 2011. "Models of Spatial Competition: a Critical Review," FEP Working Papers 411, Universidade do Porto, Faculdade de Economia do Porto.
  6. Brekke, Kurt R. & Nuscheler, Robert & Straume, Odd Rune, 2002. "Quality and location choices under price regulation," Discussion Papers, Research Unit: Market Processes and Governance FS IV 02-28, Social Science Research Center Berlin (WZB).
  7. Kourandi, Frago & Vettas, Nikolaos, 2010. "Endogenous Spatial Differentiation with Vertical Contracting," CEPR Discussion Papers 7948, C.E.P.R. Discussion Papers.
  8. Babaioff, Moshe & Nisan, Noam & Pavlov, Elan, 2009. "Mechanisms for a spatially distributed market," Games and Economic Behavior, Elsevier, vol. 66(2), pages 660-684, July.
  9. Fabian Herweg, 2012. "Relaxing competition through quality differentiation and price discrimination," Journal of Economics, Springer, vol. 106(1), pages 1-26, May.

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