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Pareto Optimal Allocation and Price Equilibrium for a Duopoly with Negative Externality

Author

Listed:
  • Pablo Dorta-González
  • Dolores-Rosa Santos-Peñate
  • Rafael Suárez-Vega

Abstract

A spatial competition model involving decisions made by consumers and firms is proposed. A regulating agent assigns the demand, taking into account the price, transport and externality cost, and minimizing the joint consumer cost to obtain a Pareto optimal allocation. Assuming the Pareto optimal allocation, firms fix prices in order to maximize the profit. An equilibrium problem is studied and some results are presented. The problem and results are illustrated with an example. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Pablo Dorta-González & Dolores-Rosa Santos-Peñate & Rafael Suárez-Vega, 2002. "Pareto Optimal Allocation and Price Equilibrium for a Duopoly with Negative Externality," Annals of Operations Research, Springer, vol. 116(1), pages 129-152, October.
    • Handle: RePEc:spr:annopr:v:116:y:2002:i:1:p:129-152:10.1023/a:1021380314032
    DOI: 10.1023/A:1021380314032
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    Cited by:

    1. Sebastian Sitarz, 2009. "Pareto optimal allocations and dynamic programming," Annals of Operations Research, Springer, vol. 172(1), pages 203-219, November.

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