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


  • Yeung-Nan Shieh

    () (San Jose State University)

  • Chiou-Nan Yeh

    () (Alabama State University)


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

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    References listed on IDEAS

    1. 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.
    2. 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.
    3. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 157-175.
    4. 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.
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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

    More about this item


    Firm location;

    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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