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Location in a disk city with consumer concentration around the center

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  • Stadler, Manfred

Abstract

The paper studies a two-stage location-price duopoly game in a disk city with consumer concentration around the city center. When consumers are uniformly distributed over the plane, unconstrained firms locate outside of the city. Consumer concentration, however, induces firms to locate nearer to each other and, when the degree of concentration is sufficiently high, inside of the city. Prices and firm profits decrease in the degree of consumer concentration. We explicitly solve the model for classes of cone-shaped, dome-shaped, and bell-shaped consumer densities. In all cases we identify a loss of welfare due to the strategic effect which causes the firms' spatial differentiation being too large.

Suggested Citation

  • Stadler, Manfred, 2018. "Location in a disk city with consumer concentration around the center," University of Tübingen Working Papers in Business and Economics 113, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    • Handle: RePEc:zbw:tuewef:113
    DOI: 10.15496/publikation-26460
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    location strategies; disk city; concentration of consumer demand;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • 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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