IDEAS home Printed from https://ideas.repec.org/a/kap/jeczfn/v139y2023i2d10.1007_s00712-023-00820-3.html
   My bibliography  Save this article

An upstream monopoly with transport costs

Author

Listed:
  • John S. Heywood

    (University of Wisconsin-Milwaukee)

  • Zheng Wang

    (Capital University of Economics and Business)

Abstract

We analyze equilibrium locations of downstream retailers assuming transport cost from a monopoly input supplier. When the upstream transport costs equal those of retailers, a downstream monopoly may locate efficiently and two downstream firms never locate inefficiently. Even with discriminatory pricing upstream, two downstream firms locate efficiently. When assuming downstream transport costs are greater than upstream costs, routinely inefficient locations reemerge in keeping with previous literature.

Suggested Citation

  • John S. Heywood & Zheng Wang, 2023. "An upstream monopoly with transport costs," Journal of Economics, Springer, vol. 139(2), pages 159-176, July.
    • Handle: RePEc:kap:jeczfn:v:139:y:2023:i:2:d:10.1007_s00712-023-00820-3
    DOI: 10.1007/s00712-023-00820-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00712-023-00820-3
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s00712-023-00820-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lederer, Phillip J & Hurter, Arthur P, Jr, 1986. "Competition of Firms: Discriminatory Pricing and Location," Econometrica, Econometric Society, vol. 54(3), pages 623-640, May.
    2. Kenneth Fjell & John S. Heywood, 2005. "Can exclusive territories limit strategic location downstream?," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 221-237, June.
    3. Norman, George, 1981. "Uniform Pricing as an Optimal Spatial Pricing Policy," Economica, London School of Economics and Political Science, vol. 48(189), pages 87-91, February.
    4. Hurter, Arthur Jr & Lederer, Phillip J., 1985. "Spatial duopoly with discriminatory pricing," Regional Science and Urban Economics, Elsevier, vol. 15(4), pages 541-553, November.
    5. Gupta, Barnali, 1994. "Competitive spatial price discrimination with strictly convex production costs," Regional Science and Urban Economics, Elsevier, vol. 24(2), pages 265-272, April.
    6. Thisse, Jacques-Francois & Vives, Xavier, 1988. "On the Strategic Choice of Spatial Price Policy," American Economic Review, American Economic Association, vol. 78(1), pages 122-137, March.
    7. Greenhut, Melvin L, 1981. "Spatial Pricing in the United States, West Germany and Japan," Economica, London School of Economics and Political Science, vol. 48(189), pages 79-86, February.
    8. Heywood, John S. & Pal, Debashis, 1996. "How to tax a spatial monopolist," Journal of Public Economics, Elsevier, vol. 61(1), pages 107-118, July.
    9. Gupta, Barnali & Heywood, John S. & Pal, Debashis, 1995. "Strategic behavior downstream and the incentive to integrate: A spatial model with delivered pricing," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 327-334, September.
    10. Schöler Klaus, 2001. "Vertikal verbundene Märkte im Raum / Vertical Integration in Spatial Markets," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(4), pages 394-403, August.
    11. Carlton, Dennis W, 1983. "A Reexamination of Delivered Pricing Systems," Journal of Law and Economics, University of Chicago Press, vol. 26(1), pages 51-70, April.
    12. John Greenhut & M. L. Greenhut & Sheng-yung Li, 1980. "Spatial Pricing Patterns in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(2), pages 329-350.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John S. Heywood & Zheng Wang, 2020. "Profitable collusion on costs: a spatial model," Journal of Economics, Springer, vol. 131(3), pages 267-286, December.
    2. Kai Andree & John S. Heywood & Mike Schwan & Zheng Wang, 2018. "A Spatial Model Of Cartel Stability: The Influence Of Production Cost Convexity," Bulletin of Economic Research, Wiley Blackwell, vol. 70(3), pages 298-311, July.
    3. Pires, Cesaltina Pacheco & Sarkar, Soumodip, 2000. "Delivered nonlinear pricing by duopolists," Regional Science and Urban Economics, Elsevier, vol. 30(4), pages 429-456, July.
    4. John S. Heywood & Dongyang Li & Guangliang Ye, 2020. "Does price discrimination make collusion less likely? a delivered pricing model," Journal of Economics, Springer, vol. 131(1), pages 39-60, September.
    5. John S. Heywood & Zheng Wang, 2016. "Strategic delegation under spatial price discrimination," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 193-213, March.
    6. John Heywood & Guangliang Ye, 2013. "Sequential entry and merger in spatial price discrimination," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 841-859, June.
    7. Gabriel Courey, 2018. "Spatial price discrimination, sequential location and convex production costs," Letters in Spatial and Resource Sciences, Springer, vol. 11(2), pages 223-232, July.
    8. Combes, Pierre-Philippe & Linnemer, Laurent, 2000. "Intermodal competition and regional inequalities," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 131-184, March.
    9. Pires, Cesaltina Pacheco, 2005. "Constrained efficient locations under delivered pricing," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 49-56, January.
    10. Jen-Te Yao, 2019. "The impact of transportation asymmetry on the choice of a spatial price policy," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 793-811, October.
    11. Heywood, John S. & Wang, Zerong & Ye, Guangliang, 2023. "Spatial price discrimination in a mixed duopoly input market," Regional Science and Urban Economics, Elsevier, vol. 102(C).
    12. Marten Graubner, 2020. "Spatial monopoly pricing under non-constant marginal costs," Letters in Spatial and Resource Sciences, Springer, vol. 13(1), pages 81-97, April.
    13. Boyer, Marcel & Mahenc, Philippe & Moreaux, Michel, 2003. "Entry preventing locations under incomplete information," International Journal of Industrial Organization, Elsevier, vol. 21(6), pages 809-829, June.
    14. María García & Blas Pelegrín & Pascual Fernández, 2011. "Location strategy for a firm under competitive delivered prices," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 1-23, August.
    15. Stefano Colombo, 2009. "The unidirectional Hotelling model with spatial price discrimination," Economics Bulletin, AccessEcon, vol. 29(4), pages 3031-3040.
    16. Cesaltina Pires, 2009. "Location choice under delivered pricing: a reinterpretation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 199-213, March.
    17. Tharakan, J., 2001. "Revisiting “On nations’ size and transportation costs”," LIDAM Discussion Papers CORE 2001032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Aguirre, Inaki & Espinosa, Maria Paz & Macho-Stadler, Ines, 1998. "Strategic entry deterrence through spatial price discrimination," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 297-314, May.
    19. John S. Heywood & Dongyang Li & Guangliang Ye, 2021. "Spatial pricing and collusion," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 425-440, May.

    More about this item

    Keywords

    Transport costs; Upstream monopoly; Spatial price discrimination;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:139:y:2023:i:2:d:10.1007_s00712-023-00820-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.