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Spatial competition and the location on firms with non uniformly distributed costumers

Author

Listed:
  • Montes-Rojas, Gabriel

    (CONICET-Universidad de San Andrés)

Abstract

This paper develops a free-entry spatial model that provides theoretical assessments for explaining firms’ prices and locations with a non-uniform costumers’ distribution. Costumers, located on the real line, incur in a cost proportional to the distance to the firm for buying its goods. This model accounts for firms’ tendency to concentrate in high density regions and to charge lower prices. A solution algorithm is presented and comparative static exercises are used to show the effect of changes in the transportation costs and dispersion of costumers.

Suggested Citation

  • Montes-Rojas, Gabriel, 2015. "Spatial competition and the location on firms with non uniformly distributed costumers," Revista de Economía Política de Buenos Aires, Universidad de Buenos Aires. Facultad de Ciencias Económicas., issue 14, pages 83-107, December.
    • Handle: RePEc:ake:repba1:y:2015:i:14:p:83-107
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    File URL: https://ojs.econ.uba.ar/index.php/REPBA/article/view/826/1460
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    Citations

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    Cited by:

    1. Gaëtan Fournier, 2019. "General distribution of consumers in pure Hotelling games," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(1), pages 33-59, March.

    More about this item

    Keywords

    location; spatial models;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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