On the Optimality of Central Places
A model of consumer multipurpose shopping is used for studying the optimality of central places. There are two different commodities sold by two different types of firms. The shopping frequencies are exogenously given and different for the two commodities. Consumers can group their purchases of the two commodities in order to reduce transport costs. It is shown that the socially optimal configuration of firms always involves the clustering of a firm type 2 (low purchase frequency) with a firm of type 1 (high purchase frequency), assuming that the number of firms of type 2 is smaller than the number of firms of type 1. Copyright 1990 by The Econometric Society.
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Volume (Year): 58 (1990)
Issue (Month): 5 (September)
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