Imperfect Competition and Congestion in a City with asymmetric subcenters

André de Palma (), Stef Proost and Fay Dunkerley ()
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Fay Dunkerley: K.U.Leuven-Center for Economic Studies

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

Abstract: This paper develops a model for the monopolistic competition of subcenters for the shoppers and workers of a central city. The model is an extension of the de Palma & Proost (2004) model that is limited to the symmetric case. Inhabitants of a CBD can choose one of the subcenters to buy a differentiated product and choose one of the subcenters to supply differentiated labour. The subcenters compete in prices and wages and the access to the subcenters can be congested. The short term and free entry equilibria are studied. As general properties are rare in the non-symmetrical monopolistic competition case, this paper draws more on numerical examples than on hard theorems. Starting from a symmetric base case, the paper explores the effects on welfare and number of subcenters of introducing diversity in the distances to the subcenter, quality of the subcenters, congestion and attractiveness of the subcenter as workplace. The paper shows cases where asymmetry can increase welfare and where the order in which firms enter the market matters for the equilibrium outcome.

Keywords: Road Pricing; Product Di.erentiation; Location Theory; New Economic Geography; Congestion. (search for similar items in EconPapers)
JEL-codes: D43 L13 R13 R41 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2004-08
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Chapter: Imperfect Competition and Congestion in a City with Asymmetric Subcentres (2006)
Working Paper: Imperfect competition and congestion in a city with asymmetric subcentres (2006)
Working Paper: Imperfect Competition and Congestion in a City with asymmetric subcenters (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0411

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