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Input Specificity and Location

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  • Jose Pedro Pontes

Abstract

In a two-region economy, two upstream firms supply an input to two consumer goods firms. For two different location patterns (site specificity and co-location of the suppliers), the firms play a three-stage game: the input suppliers select transport rates; then they choose outputs; finally the buyers select quantities of the consumer good. It is concluded that the site specificity of the input leads to a high transport cost and to its specialized adaptation to the needs of the local user.

Suggested Citation

  • Jose Pedro Pontes, 2005. "Input Specificity and Location," Working Papers Department of Economics 2005/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp12005
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    References listed on IDEAS

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    Cited by:

    1. José Pontes, 2007. "Networks and firm location," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(4), pages 897-909, December.

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    More about this item

    Keywords

    Technological Choice; Spatial Oligopoly; Vertically-linked Industries.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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