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Equilibrium Nonexistence in Spatial Competition with Quadratic Transportation Costs

Author

Listed:
  • Arguedas, Carmen

    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Hamoudi, Hamid

    (Departamento de Economía Aplicada y Fundamentos del Análisis Económico II, Universidad Rey Juan Carlos)

  • Saez, Manuel

    (Departamento de Economía, Universidad Europea de Madrid)

Abstract

Under quadratic transportation costs, the existence of the sequential first-locate-thenprice equilibrium in spatial competition is well known in the literature. In this paper, we find that the equilibrium may fail to exist under certain restrictions with respect to the location of firms and consumers in the market. This result is valid for both the linear and the circular models

Suggested Citation

  • Arguedas, Carmen & Hamoudi, Hamid & Saez, Manuel, 2007. "Equilibrium Nonexistence in Spatial Competition with Quadratic Transportation Costs," Working Papers in Economic Theory 2007/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    • Handle: RePEc:uam:wpaper:200701
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    File URL: http://www.uam.es/departamentos/economicas/analecon/especifica/mimeo/wp20071.pdf
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    References listed on IDEAS

    as
    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. Anderson, S., 1986. "Equilibrium existence in the linear model of spatial competition," LIDAM Discussion Papers CORE 1986013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Anderson, S., 1986. "Equilibrium existence in the circle of product differentiation," LIDAM Discussion Papers CORE 1986006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Anderson, Simon P & De Palma, Andre, 1992. "The Logit as a Model of Product Differentiation," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 51-67, January.
    7. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
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    Keywords

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    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

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