Transport Demand and Spatial Equilibria
Characteristics of transport demand are inferred from spatial equilibrium with exogenous locations. For non-trivial spatial distributions of firms and markets I derive computable expressions for elasticity of transport demand, producer surplus, and consumer surplus as a function of the mass-distance price of transport. Producer surplus is likely to have one or more local maxima, suggesting a disincentive for producers to minimise transport costs. Numerical simulation is used to illustrate results. A method is suggested for computing simultaneous transport and commodity market equilibria for spatially dispersed markets. © 2008 LSE and the University of Bath
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