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A synthesis of location models

Author

Listed:
  • Marta Risueño

    (Universidad Rey Juan Carlos)

  • Hamid Hamoudi

    (Universidad Rey Juan Carlos)

Abstract

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.

Suggested Citation

  • Marta Risueño & Hamid Hamoudi, 2007. "A synthesis of location models," Economics Bulletin, AccessEcon, vol. 3(30), pages 1-15.
    • Handle: RePEc:ebl:ecbull:eb-07c70009
    as

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    References listed on IDEAS

    as
    1. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 2002. "Spatial competition with concave transport costs," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 531-540, July.
    2. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 1999. "Equilibrium existence in the circle model with linear quadratic transport cost," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 605-615, September.
    3. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-172, March.
    4. Anderson, S., 1986. "Equilibrium existence in the circle of product differentiation," LIDAM Discussion Papers CORE 1986006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    6. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
    7. Economides, Nicholas, 1986. "Minimal and maximal product differentiation in Hotelling's duopoly," Economics Letters, Elsevier, vol. 21(1), pages 67-71.
    8. repec:bla:econom:v:55:y:1988:i:220:p:479-91 is not listed on IDEAS
    9. 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.
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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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