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Strategic Consumer Location In Spatial Competition Models

Author

Listed:
  • Nikolaos Georgantzis

    (Universitat Jaume I)

  • Aurora García Gallego

    (Universitat Jaume I)

  • Vicente Orts

    (Universitat Jaume I)

Abstract

We consider a number of individual, discrete consumers, deciding their location on Hotelling's line in a non-cooperative way. Agglomeration emerges as a non-cooperative equilibrium, implying high transportation costs. No restriction is required concerning the functional forrn of transport costs except that they increase with the distance. In a two-dimensional market and a two-complementary-products- four-firm version of the model, the importance of transportation costs for consumer location is recovered, with consumer location determined by the interaction of two factors: minimisation of transportation costs and the intensity-ofcompetition effect of consumer agglomeration. Se considera un número de consumidores que deciden su localización sobre la línea de Hotelling en una manera no cooperativa. El resultado del equilibrio iio cooperativo es la aglomeración que, además, implica altos costes de transporte. No se impone ninguna restricción sobre la función de costes de transporte, excepto la de ser creciente respecto a la distancia. La importancia de los costes de transporte en la ubicación de los consumidores se recupera en una versión bi-dimensional del modelo, con dos bienes complementarios y cuatro empresas. La localización del consumidor se obtiene de la interacción entre dos factores: la minimización de los costes de transporte y el efecto de estimulo de la competencia de la aglomeración de los consumidores.

Suggested Citation

  • Nikolaos Georgantzis & Aurora García Gallego & Vicente Orts, 1995. "Strategic Consumer Location In Spatial Competition Models," Working Papers. Serie EC 1995-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasec:1995-17
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    File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-1995-17.pdf
    File Function: Fisrt version / Primera version, 1995
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    Citations

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    Cited by:

    1. Aurora García, Nikolaos Georgantzís, Vicente Orts Ríos, & José C. Pernías, "undated". "Profile Learning by Strategic Workers in Wage-Setting Duopsony," Computing in Economics and Finance 1997 149, Society for Computational Economics.
    2. Vicente Calabuig Alcantara, 1997. "Ineficiencias en las negociaciones entre dos agentes completamente informados," Working Papers. Serie EC 1997-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Camacho-Cuena, Eva & Garcia-Gallego, Aurora & Georgantzis, Nikolaos & Sabater-Grande, Gerardo, 2005. "Buyer-seller interaction in experimental spatial markets," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 89-108, March.

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