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Zoning Under Spatial Price Discrimination

Author

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  • JUAN CARLOS BÁRCENA-RUIZ
  • FRANCISCO JAVIER CASADO-IZAGA

Abstract

type="main" xml:lang="en"> This paper investigates zoning in a duopoly model of spatial price discrimination. We find that the zone in which the firms are not allowed to locate depends on the bias of the regulator. A bias toward firms is deduced when locations around the central area are forbidden, and a bias toward consumers exists when firms are only allowed to locate at places around the central area. The design of the zoned area guarantees that firms locate optimally and works under simultaneous or sequential choice of locations by the two firms. (JEL L13, R38)

Suggested Citation

  • Juan Carlos Bárcena-Ruiz & Francisco Javier Casado-Izaga, 2014. "Zoning Under Spatial Price Discrimination," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 659-665, April.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:2:p:659-665
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    File URL: http://hdl.handle.net/10.1111/ecin.12071
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    References listed on IDEAS

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    1. Lederer, Phillip J & Hurter, Arthur P, Jr, 1986. "Competition of Firms: Discriminatory Pricing and Location," Econometrica, Econometric Society, vol. 54(3), pages 623-640, May.
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    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. Hurter, Arthur Jr & Lederer, Phillip J., 1985. "Spatial duopoly with discriminatory pricing," Regional Science and Urban Economics, Elsevier, vol. 15(4), pages 541-553, November.
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    9. Matsushima, Noriaki & Matsumura, Toshihiro, 2006. "Mixed oligopoly, foreign firms, and location choice," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 753-772, November.
    10. Edgar M. Hoover, 1937. "Spatial Price Discrimination," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(3), pages 182-191.
    11. Lai, Fu-Chuan & Tsai, Jyh-Fa, 2004. "Duopoly locations and optimal zoning in a small open city," Journal of Urban Economics, Elsevier, vol. 55(3), pages 614-626, May.
    12. Chen, Chin-Sheng & Lai, Fu-Chuan, 2008. "Location choice and optimal zoning under Cournot competition," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 119-126, March.
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    Citations

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    Cited by:

    1. Juan Carlos Bárcena-Ruiz & F. Javier Casado-Izaga, 2018. "Optimal size of a residential area within a municipality," Journal of Economics, Springer, vol. 124(1), pages 75-92, May.
    2. Jin Guo & Yingzhi Xu, 2016. "Externalities of urban agglomerations: An empirical study on Chinese case," ERSA conference papers ersa16p64, European Regional Science Association.
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    4. Youping Li & Jie Shuai, 2018. "A Welfare Analysis of Location Space Constraints with Vertically Separated Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 161-177, February.
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    6. Gabriel Courey, 2018. "Spatial price discrimination, sequential location and convex production costs," Letters in Spatial and Resource Sciences, Springer, vol. 11(2), pages 223-232, July.
    7. Chen Jingliang & Shuai Jie, 2019. "Privatizing Multi-subsidiary Public Firm in Location Model," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-14, January.
    8. Hamid Hamoudi & María J. Moral, 2017. "Green zoning regulation under price discrimination," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 151-171.
    9. Juan Carlos Bárcena-Ruiz & F. Javier Casado-Izaga, 2020. "Partial ownership of local firms and zoning of neighboring towns," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(1), pages 27-43, August.

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    More about this item

    JEL classification:

    • 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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