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Travel Circle: A Model of Supply Chains

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  • Lau, C. Oscar

Abstract

Travel circle is a metaphor for supply chains: in travel circle, travelers are transported by carriers in multiple legs from the center to diverse destinations on the circumference; in supply chains, goods are transformed in multiple stages by firms from natural resources into differentiated products. The model is generated using only three cost parameters. At the start of supply chains, a few firms mass-produce standardized commodities at low unit costs; at the end, many firms produce distinctive products in small scales at high unit costs. As an extension, the circle’s size is endogenized to account for consumers’ preferences for varieties.

Suggested Citation

  • Lau, C. Oscar, 2022. "Travel Circle: A Model of Supply Chains," MPRA Paper 115291, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115291
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    File URL: https://mpra.ub.uni-muenchen.de/115690/9/MPRA_paper_115690.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Product differentiation; Scale economies; Entry game;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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