A synthesis of location models
This article considers a model of spatial competition where firms and consumers are located in a semicircular space rather than in the whole circle (Salop's model) or the linear city (Hotelling's model), under the assumptions of both, convex and concave, transportation costs. The paper tries to generalize the results of the two previous models. We find that for concave transportation costs the existence of a price equilibrium is warranted for every firms' location when the length of the semicircular space is greater than 3/4. For the convex case, perfect equilibrium is only obtained when the size of the market segment is equivalent to Hotelling's linear model.
Volume (Year): 3 (2007)
Issue (Month): 30 ()
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- d'ASPREMONT, Claude & GABSZEWICZ, Jean J. & THISSE, Jacques-François, .
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CORE Discussion Papers RP
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- GABSZEWICZ, Jean J. & THISSE, Jacques-François, .
"On the nature of competition with differentiated products,"
CORE Discussion Papers RP
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"Equilibrium existence in the linear model of spatial competition,"
CORE Discussion Papers
1986013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Anderson, Simon P, 1988. "Equilibrium Existence in the Linear Model of Spatial Competition," Economica, London School of Economics and Political Science, vol. 55(220), pages 479-91, November.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
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