Spatial competition and the location on firms with non uniformly distributed costumers

Gabriel Montes-Rojas ()

Revista de Economía Política de Buenos Aires, 2015, issue 14, 83-107

Abstract: This paper develops a free-entry spatial model that provides theoretical assessments for explaining firms’ prices and locations with a non-uniform costumers’ distribution. Costumers, located on the real line, incur in a cost proportional to the distance to the firm for buying its goods. This model accounts for firms’ tendency to concentrate in high density regions and to charge lower prices. A solution algorithm is presented and comparative static exercises are used to show the effect of changes in the transportation costs and dispersion of costumers.

Keywords: location; spatial models (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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