Transportation rates, monopsony power and the location decision of the firm
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.
Volume (Year): 18 (2004)
Issue (Month): 1 ()
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- 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.
- 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.
- 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.
- 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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