Spatial asymmetric duopoly with an application to Brussels' airports

Fay Dunkerley, André de Palma () and Stef Proost
Additional contact information
Fay Dunkerley: KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven

Working Papers from HAL

Abstract: In this paper the problem of a city with access to two firms or facilities (shopping malls, airports, commercial districts) selling a differentiated product (shopping, flights) and/or offering a differentiated workplace is studied. Transport connections to one facility are congested. A model is presented for this asymmetric duopoly game that can be solved for a Nash equilibrium in prices and wages. A comparative statics analysis is used to illustrate the properties of the equilibrium. A numerical model is then applied to the two Brussels airports. Three stylised policies are implemented to address the congestion problem: expansion of transport capacity; congestion pricing; and a direct subsidy to the uncongested facility. Our results indicate that the degree of intrinsic differentiation between the two firms is crucial in determining the difference in profit and market share. Price and wage differences also depend on trip frequency and consumer preferences for diversity. Congestion pricing is the most effective policy tool but all three options are shown to have attractive attributes.

Keywords: duopoly; imperfect competition; congestion; general equilibrium; airport competition (search for similar items in EconPapers)
Date: 2008-12
Note: View the original document on HAL open archive server: https://hal.science/hal-00348443
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-00348443/document (application/pdf)

Related works:
Journal Article: SPATIAL ASYMMETRIC DUOPOLY WITH AN APPLICATION TO BRUSSELS' AIRPORTS* (2009)
Working Paper: Spatial asymmetric duopoly with an application to Brussels’ airports (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-00348443

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().