Unsuspected Perversities in the Theory of Location

B. Curtis Eaton () and Richard G. Lipsey

Working Papers from Queen's University, Department of Economics

Abstract: On an infinitely-extensible plane, the socially-optimal configuration of firms is a regular hexagonal lattice. Will the free market necessarily produce this configuration? We argue the currently-accepted answer, yes, was erroneously derived from models where equilibrium conditions are asserted rather than being derived. We answer the above question, no, showing that in the standard location model: a) many configurations satisfy the equilibrium conditions; and b) if a hexagonal configuration is initially imposed, it is less likely to persist through successive rounds of entry than is a square or rectangular configuration.

Date: 1972

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Persistent link: http://EconPapers.repec.org/RePEc:qed:wpaper:88

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