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A synthesis of location models

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  • Marta Risueño

    ()
    (Universidad Rey Juan Carlos)

  • Hamid Hamoudi

    ()
    (Universidad Rey Juan Carlos)

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    Abstract

    This article considers a model of spatial competition where firms and consumers are located in a semicircular space rather than in the whole circle (Salop's model) or the linear city (Hotelling's model), under the assumptions of both, convex and concave, transportation costs. The paper tries to generalize the results of the two previous models. We find that for concave transportation costs the existence of a price equilibrium is warranted for every firms' location when the length of the semicircular space is greater than 3/4. For the convex case, perfect equilibrium is only obtained when the size of the market segment is equivalent to Hotelling's linear model.

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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 3 (2007)
    Issue (Month): 30 ()
    Pages: 1-15

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    Handle: RePEc:ebl:ecbull:eb-07c70009

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    1. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 2002. "Spatial competition with concave transport costs," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 531-540, July.
    2. Hamid Hamoudi & María J. Moral, 2005. "Equilibrium existence in the linear model: Concave versus convex transportation costs," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 201-219, 06.
    3. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September.
    4. Anderson, Simon P, 1988. "Equilibrium Existence in the Linear Model of Spatial Competition," Economica, London School of Economics and Political Science, vol. 55(220), pages 479-91, November.
    5. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 1999. "Equilibrium existence in the circle model with linear quadratic transport cost," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 605-615, September.
    6. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    7. Economides, Nicholas, 1986. "Minimal and maximal product differentiation in Hotelling's duopoly," Economics Letters, Elsevier, vol. 21(1), pages 67-71.
    8. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On the nature of competition with differentiated products," CORE Discussion Papers RP -685, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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