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The socially optimal and equilibrium locations of two stores or libraries with consumer search

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  • Ralph Braid

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Abstract

This paper examines the socially optimal (and also equilibrium) locations of two stores or libraries on a linear market of unit length. If each consumer has probability $$w$$ w of finding a desired product at each store, then the socially optimal locations are never completely centralized for full information, but are completely centralized for $$w \le 0.5$$ w ≤ 0.5 when costly visit search is necessary. The Nash equilibrium locations of two stores, and various alternative models for the socially optimal locations of two stores, are also examined. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Ralph Braid, 2014. "The socially optimal and equilibrium locations of two stores or libraries with consumer search," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 123-136, August.
  • Handle: RePEc:spr:anresc:v:53:y:2014:i:1:p:123-136
    DOI: 10.1007/s00168-014-0620-6
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    References listed on IDEAS

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    More about this item

    Keywords

    R32; L81; D83;

    JEL classification:

    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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