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The equivalence of convex and concave transport cost in a circular spatial model with and without zoning

Author

Listed:
  • Hamid Hamoudi
  • Isabel Mª Rodríguez Iglesias
  • Marcos Sanz Martín-Bustamante

Abstract

This article depicts a location game in a circular market. The equivalence results between a convex and a concave transport cost are reexamined by assuming an arbitrary length. In contrast to previous research the solution found shows that the equivalence relationship depends on the space length. Furthermore, the analysis is extended to a circular model with unitary length and zoning. In this case equivalence does not hold. Moreover, non-existence of equilibrium is shown under strictly linear quadratic functions. Surprisingly, equilibrium exists for a concave quadratic function but not for a convex quadratic function.

Suggested Citation

  • Hamid Hamoudi & Isabel Mª Rodríguez Iglesias & Marcos Sanz Martín-Bustamante, 2015. "The equivalence of convex and concave transport cost in a circular spatial model with and without zoning," Estudios de Economia, University of Chile, Department of Economics, vol. 42(1 Year 20), pages 5-20, June.
    • Handle: RePEc:udc:esteco:v:42:y:2015:i:1:p:5-20
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    References listed on IDEAS

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    1. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 2002. "Spatial competition with concave transport costs," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 531-540, July.
    2. de Frutos, M. A. & Hamoudi, H. & Jarque, X., 1999. "Equilibrium existence in the circle model with linear quadratic transport cost," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 605-615, September.
    3. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-172, March.
    4. Christopher Carpenter, 2007. "Heavy Alcohol Use and Crime: Evidence from Underage Drunk-Driving Laws," Journal of Law and Economics, University of Chicago Press, vol. 50(3), pages 539-557.
    5. Hamid Hamoudi & Marta Risueño, 2012. "The Effects Of Zoning In Spatial Competition," Journal of Regional Science, Wiley Blackwell, vol. 52(2), pages 361-374, May.
    6. Matsumura, Toshihiro & Okamura, Makoto, 2006. "A note on the excess entry theorem in spatial markets," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 1071-1076, September.
    7. Janet S. Netz & Beck A. Taylor, 2002. "Maximum Or Minimum Differentiation? Location Patterns Of Retail Outlets," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 162-175, February.
    8. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 1995. "Asymmetric equilibria in spatial competition," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 213-227.
    9. repec:bla:econom:v:55:y:1988:i:220:p:479-91 is not listed on IDEAS
    10. Hamid Hamoudi & María J. Moral, 2005. "Equilibrium existence in the linear model: Concave versus convex transportation costs," Papers in Regional Science, Wiley Blackwell, vol. 84(2), pages 201-219, June.
    11. Hamid Hamoudi & Marcos Sanz Martín‐Bustamante, 2011. "Revisiting price equilibrium existence in the linear‐city model of spatial competition," Papers in Regional Science, Wiley Blackwell, vol. 90(1), pages 179-196, March.
    12. Steffen Brenner, 2005. "Hotelling Games with Three, Four, and More Players," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 851-864, November.
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    Cited by:

    1. Hamid Hamoudi & Isabel Rodríguez & Marcos Sanz Martín-Bustamante, 2017. "Optimal Zoning in Spatial Differentiation," Estudios de Economia, University of Chile, Department of Economics, vol. 44(1 Year 20), pages 33-51, June.

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    More about this item

    Keywords

    Convexity; concavity; spatial competition; circular model; transport costs; regulator.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • 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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