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Equilibrium Nonexistence in Spatial Competition with Quadratic Transportation Costs

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  • Arguedas, Carmen

    ()
    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Hamoudi, Hamid

    ()
    (Departamento de Economía Aplicada y Fundamentos del Análisis Económico II, Universidad Rey Juan Carlos)

  • Saez, Manuel

    ()
    (Departamento de Economía, Universidad Europea de Madrid)

Abstract

Under quadratic transportation costs, the existence of the sequential first-locate-thenprice equilibrium in spatial competition is well known in the literature. In this paper, we find that the equilibrium may fail to exist under certain restrictions with respect to the location of firms and consumers in the market. This result is valid for both the linear and the circular models

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Bibliographic Info

Paper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2007/01.

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Length: 20 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:uam:wpaper:200701

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Keywords: Product differentiation; circular model; linear model; quadratic transportation costs; sequential equilibrium;

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  1. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-72, March.
  2. Economides, Nicholas, 1986. "Minimal and maximal product differentiation in Hotelling's duopoly," Economics Letters, Elsevier, vol. 21(1), pages 67-71.
  3. 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.
  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. 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.
  6. Anderson, Simon P & De Palma, Andre, 1992. "The Logit as a Model of Product Differentiation," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 51-67, January.
  7. 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.
  8. Anderson, S., 1986. "Equilibrium existence in the circle of product differentiation," CORE Discussion Papers 1986006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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