On the Shape and Size of Market Areas
How should the suppliers of a commodity be located so as to generate the greatest amount of welfare per unit area? Welfare is defined as consumers' surplus plus producers' profits. Costs of production are assumed to be linear functions of output identical for all firms and at all locations. Consumers are distributed in an unbounded two dimensional space at uniform density. They have identical linear demand functions. We determine both the optimal shape and the optimal radius of a representative firm's market area and compare them to those under free entry; the Loschian case of monopolistic competition. The general shape is that of rounded hexagons (or hexagonally flattened circles) with hexagons and circles as limiting cases. When fixed costs are high and firms are few, free entry creates fewer firms than is optimal, contrary to the well-known results for a free entry equilibrium in non-spatial monopolistic competition.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 23 (1989)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://link.springer.de/link/service/journals/00168/index.htm|
More information through EDIRC
|Order Information:||Web: http://link.springer.de/orders.htm|
When requesting a correction, please mention this item's handle: RePEc:spr:anresc:v:23:y:1989:i:2:p:81-91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F Baum)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.