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Optimal zoning in the unconstrained Hotelling game

Author

Listed:
  • Bárcena†Ruiz, Juan Carlos
  • Casado†Izaga, F.Javier
  • Hamoudi, Hamid
  • Rodriguez, Isabel

Abstract

This paper studies a zoning mechanism that gives the optimal locations of two firms in a linear city under mill prices. A regulator biased towards consumers allows a central area of the city to be shared by firms and consumers and thus firms are not allowed to locate outside the city limits. A regulator more concerned about firms extends this central zone outside the city limits and the city has a residential use only if the firms so decide. Finally, a regulator highly biased towards firms allows them to locate only beyond a set distance from the city, so there is a strip of land outside the city but close to its boundaries, for alternative uses.

Suggested Citation

Handle: RePEc:eee:paresc:v:95:y:2016:i:2:p:427-436
DOI: 10.1111/pirs.12132
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JEL classification:

  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
  • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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