Urban Public Facility Location, Multipurpose Trips and Spatial Competition: equilibrium and welfare analysis
AbstractWe study the impact of the urban location of one single public facility on spatial competition ` la Hotelling. If transportation costs are very low compared to the value of the public service then both firms tacitly choose the facility location without moderation of price competition, in contrast to mainstream results in the literature. In this event, minimum differentiation is efficient. For intermediate values of the relative transportation rate, inefficient partially-dispersed equilibria emerge with one firm at the facility site while its competitor locates at one end of the linear city. We also analyze the welfare impacts of changes, successively, in the facility location and the transportation rate, taking into account firms relocations.
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Bibliographic InfoPaper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp400.
Length: 38 pages
Date of creation: 2001
Date of revision:
public facility; multipurpose trip; full agglomeration; partial dispersion; optimal location;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
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