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Imperfect competition and congestion in the City

Author

Listed:
  • André de Palma
  • Stef Proost

Abstract

This paper presents a spatial model to study imperfect competition with congestion. The model is used to examine the price and wage setting of subcenters of a city. Residents live in a city while they shop and work in subcentres. Each subcenter offers one differentiated product and one differentiated workplace. Shopping and commuting from the city to the subcenter requires the use of transport infrastructure that can be congested. We show the existence of a Nash equilibrium in prices and wages and analyse the welfare impacts of congestion charging and infrastructure policies. This paper generalises the literature on imperfect competition with differentiated products as well as the literature on congestion pricing with imperfect competition.

Suggested Citation

  • André de Palma & Stef Proost, 2004. "Imperfect competition and congestion in the City," Working Papers of Department of Economics, Leuven 544098, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:544098
    Note: paper number ETE WP 2004-09
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    File URL: https://lirias.kuleuven.be/retrieve/79137b3c-26fb-4abc-8756-62d8fd34a295
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    Cited by:

    1. Sun, Weizeng & Guo, Dongmei & Li, Qiang & Fang, Haidong, 2021. "School runs and urban traffic congestion: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    2. de Palma, Andre & Proost, Stef, 2006. "Imperfect competition and congestion in the City," Journal of Urban Economics, Elsevier, vol. 60(2), pages 185-209, September.
    3. Vandyck, Toon & Rutherford, Thomas F., 2018. "Regional labor markets, commuting, and the economic impact of road pricing," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 217-236.
    4. Fay Dunkerley & Andre De Palma & Stef Proost, 2009. "Spatial Asymmetric Duopoly With An Application To Brussels' Airports," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 529-553, August.

    More about this item

    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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