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Optimal transportation policy with strategic locational choice

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  • Thisse, Jacques-Francois
  • Wildasin, David E.

Abstract

This paper presents a model of strategic locational choice by duopolistic firms in an urban area where consumer locations are endogenous and where a public facility is exogenously fixed. A welfare analysis taking their strategic behaviour into account is conducted. It is shown that the firms' equilibrium locations often differ from the optimal locations which, in contrast to standard location theory, are not at the quartiles of the urban area. Corrective transportation taxes or subsidies can be used to support an optimal locational structure. Changes in transportation costs require unit-for-unit offsetting changes in transportation taxes or subsidies.
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Suggested Citation

  • Thisse, Jacques-Francois & Wildasin, David E., 1995. "Optimal transportation policy with strategic locational choice," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 395-410, August.
    • Handle: RePEc:eee:regeco:v:25:y:1995:i:4:p:395-410
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    References listed on IDEAS

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    1. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, November.
    2. Masahisa Fujita & Jacques-François Thisse, 1986. "Spatial Competition with a Land Market: Hotelling and Von Thunen Unified," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 819-841.
    3. Thisse, Jacques-Francois & Wildasin, David E., 1992. "Public facility location and urban spatial structure : Equilibrium and welfare analysis," Journal of Public Economics, Elsevier, vol. 48(1), pages 83-118, June.
    4. Fujita, Masahisa & Thisse, Jacques-Francois, 1991. "Spatial duopoly and residential structure," Journal of Urban Economics, Elsevier, vol. 30(1), pages 27-47, July.
    5. de Palma, Andre, 1992. "A Game-Theoretic Approach to the Analysis of Simple Congested Networks," American Economic Review, American Economic Association, vol. 82(2), pages 494-500, May.
    6. Thisse, Jacques-Francois, 1993. "Oligopoly and the polarization of space," European Economic Review, Elsevier, vol. 37(2-3), pages 299-307, April.
    7. Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
    8. THISSE, Jacques-François & WILDASIN, David, 1992. "Public facility location and urban spatial structure," LIDAM Reprints CORE 1011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    2. Didier Baudewyns, 2001. "Urban public facility location, multipurpose trips and spatial competition: equilibrium and welfare analysis," Nova SBE Working Paper Series wp400, Universidade Nova de Lisboa, Nova School of Business and Economics.
    3. Stefano Colombo, 2013. "Predation in Space," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(1), pages 9-22, March.
    4. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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