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Equilibrium existence in the linear model: Concave versus convex transportation costs

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  • Hamid Hamoudi
  • María J. Moral

Abstract

. We focus on the general linear‐quadratic transportation costs in the linear model. Earlier results have shown that no pure‐strategy price equilibrium exists for whatever firm locations in this context. Since there is no price equilibrium for the whole market, our first objective is to calculate the feasible equilibrium region with concave costs. A crucial change of variables allows us to explicitly calculate the necessary conditions to obtain the feasible equilibrium regions. Finally, we compare the equilibrium regions with both the concave and the convex cases and find that the feasible region with convex costs is bigger than that with concave costs.

Suggested Citation

  • Hamid Hamoudi & María J. Moral, 2005. "Equilibrium existence in the linear model: Concave versus convex transportation costs," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 201-219, June.
  • Handle: RePEc:bla:presci:v:84:y:2005:i:2:p:201-219
    DOI: 10.1111/j.1435-5957.2005.00013.x
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    File URL: https://doi.org/10.1111/j.1435-5957.2005.00013.x
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    1. ANDERSON, Simon P. & de PALMA, André & THISSE, Jacques-François, 1992. "Interpretations of the logit discrete choice models and the theory of product differentiation," LIDAM Reprints CORE 1017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Marta Risueño & Hamid Hamoudi, 2007. "A synthesis of location models," Economics Bulletin, AccessEcon, vol. 3(30), pages 1-15.
    2. Egger, Hartmut & Egger, Peter, 2007. "Outsourcing and trade in a spatial world," Journal of Urban Economics, Elsevier, vol. 62(3), pages 441-470, November.
    3. repec:ebl:ecbull:v:3:y:2007:i:30:p:1-15 is not listed on IDEAS
    4. Höffler, Felix & Schmidt, Klaus M., 2008. "Two tales on resale," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1448-1460, November.
    5. Hamid Hamoudi & Isabel Mª Rodríguez Iglesias & Marcos Sanz Martín-Bustamante, 2015. "The equivalence of convex and concave transport cost in a circular spatial model with and without zoning," Estudios de Economia, University of Chile, Department of Economics, vol. 42(1 Year 20), pages 5-20, June.
    6. Egger, Hartmut & Egger, Peter, 2007. "Outsourcing and trade in a spatial world," Journal of Urban Economics, Elsevier, vol. 62(3), pages 441-470, November.
    7. Erdmann, Anett, 2014. "Hotelling meets Holmes : the importance of returns to product differentiation and distribution economies for the firm's optimal location choice," UC3M Working papers. Economics we1420, Universidad Carlos III de Madrid. Departamento de Economía.

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