Regional competition for the location of new facilities

Thomas Christiaans ()
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Thomas Christiaans: Department of Economics, University of Siegen, D-57068 Siegen, Germany

The Annals of Regional Science, 2002, vol. 36, issue 4, 645-661

Abstract: A model of interregional competition for the location of new facilities is analyzed as a differential game. Two regions try to enhance their attraction by making concessions to a location decision maker in order to raise the probability that a new facility will be located in a specific region. The prospective benefits and costs of exerting influence are decisive for the final outcomes of the model. The open-loop (and feedback) Nash equilibrium solution is inefficient in comparison to the cooperative solution of joint benefit maximization of both regions.

JEL-codes: C73 R38 (search for similar items in EconPapers)
Date: 2003-01-15
Note: Received: May 2000/Accepted: December 2001
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