Optimal Transportation Policy with Strategic Locational Choice

Jacques Thisse and David Wildasin

No 933, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents a model of strategic locational choice by duopolistic firms in an urban area where consumer locations are endogenous and where a public facility is exogenously fixed. A welfare analysis taking their strategic behaviour into account is conducted. It is shown that the firms' equilibrium locations often differ from the optimal locations which, in contrast to standard location theory, are not at the quartiles of the urban area. Corrective transportation taxes or subsidies can be used to support an optimal locational structure. Changes in transportation costs require unit-for-unit offsetting changes in transportation taxes or subsidies.

Keywords: Firm Location; Public Facility; Transportation Policy; Urban Structure (search for similar items in EconPapers)
JEL-codes: H21 H54 R30 R48 (search for similar items in EconPapers)
Date: 1994-04
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Citations: View citations in EconPapers (1)

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Journal Article: Optimal transportation policy with strategic locational choice (1995)
Working Paper: Optimal transportation policy with strategic locational choice (1995)
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