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Optimal Transportation Policy with Strategic Locational Choice

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  • Thisse, Jacques-François
  • Wildasin, David

Abstract

This paper presents a model of strategic locational choice by duopolistic firms in an urban area where consumer locations are endogenous and where a public facility is exogenously fixed. A welfare analysis taking their strategic behaviour into account is conducted. It is shown that the firms' equilibrium locations often differ from the optimal locations which, in contrast to standard location theory, are not at the quartiles of the urban area. Corrective transportation taxes or subsidies can be used to support an optimal locational structure. Changes in transportation costs require unit-for-unit offsetting changes in transportation taxes or subsidies.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 933.

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Date of creation: Apr 1994
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Handle: RePEc:cpr:ceprdp:933

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Related research

Keywords: Firm Location; Public Facility; Transportation Policy; Urban Structure;

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References

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  1. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627.
  2. THISSE, Jacques-François, . "Oligopoly and the polarization of space," CORE Discussion Papers RP -1042, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Thisse, Jacques-Francois & Wildasin, David E., 1992. "Public facility location and urban spatial structure : Equilibrium and welfare analysis," Journal of Public Economics, Elsevier, vol. 48(1), pages 83-118, June.
  4. Fujita, Masahisa & Thisse, Jacques-Francois, 1986. "Spatial Competition with a Land Market: Hotelling and Von Thunen Unified," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 819-41, October.
  5. FUJITA, Masahisa & THISSE, Jacques-François, . "Spatial duopoly and residential structure," CORE Discussion Papers RP -942, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
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Cited by:
  1. Baudewyns, 2001. "Urban Public Facility Location, Multipurpose Trips and Spatial Competition: equilibrium and welfare analysis," FEUNL Working Paper Series wp400, Universidade Nova de Lisboa, Faculdade de Economia.
  2. E. Bacchiega & E. Randon & L. Zirulia, 2010. "Strategic Accessibility Competition," Working Papers 696, Dipartimento Scienze Economiche, Universita' di Bologna.

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