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Transportation rates, monopsony power and the location decision of the firm

Author

Listed:
  • Yeung-Nan Shieh

    (San Jose State University)

  • Chiou-Nan Yeh

    (Alabama State University)

Abstract

This paper investigates the impact of monopsony power on the location decision of the firm. It shows that if the transportation rates are a function of distance only and the production function is homogeneous of degree one, the optimum location is independent of monopsony power. However, if the transportation rates are a function of quantity shipped and distance traveled, a homogeneous production of degree one does not ensure independence between the optimum location and monopsony power. This result is significantly different from the well-known Mai-Suwanakul-Yeh proposition in the constant transportation case.

Suggested Citation

  • Yeung-Nan Shieh & Chiou-Nan Yeh, 2004. "Transportation rates, monopsony power and the location decision of the firm," Economics Bulletin, AccessEcon, vol. 18(1), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-03r30003
    as

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    File URL: http://www.accessecon.com/pubs/EB/2004/Volume18/EB-03R30003A.pdf
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    References listed on IDEAS

    as
    1. Martinich, Joseph S. & Hurter, Arthur P., 1990. "Generalized comparative statics for the production-location problem," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 275-294, November.
    2. Chiou‐Nan Yeh & Chao‐Cheng Mai & Yeung‐Nan Shieh, 1996. "Location And The Theory Of Production Under Monopsony," Papers in Regional Science, Wiley Blackwell, vol. 75(4), pages 433-440, October.
    3. Miller, Stephen M. & Jensen, Oscar W., 1978. "Location and the theory of production : A review, summary and critique of recent contributions," Regional Science and Urban Economics, Elsevier, vol. 8(2), pages 117-128, May.
    4. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    5. Shieh, Yeung-nan & Mai, Chao-cheng, 1984. "Location and the theory of production Clarifications and extensions," Regional Science and Urban Economics, Elsevier, vol. 14(2), pages 199-218, May.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Chiung-I Hwang & Yeung-Nan Shieh, 2007. "Factor market oligopsony and the location decision of free entry oligopoly," Economics Bulletin, AccessEcon, vol. 18(6), pages 1-7.
    2. repec:ebl:ecbull:v:18:y:2007:i:6:p:1-7 is not listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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