Equilibrium Nonexistence in Spatial Competition with Quadratic Transportation Costs

Carmen Arguedas, Hamid Hamoudi () and Manuel Saez ()
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Hamid Hamoudi: Departamento de Economía Aplicada y Fundamentos del Análisis Económico II, Universidad Rey Juan Carlos
Manuel Saez: Departamento de Economía, Universidad Europea de Madrid

No 2007/01, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: Under quadratic transportation costs, the existence of the sequential first-locate-thenprice equilibrium in spatial competition is well known in the literature. In this paper, we find that the equilibrium may fail to exist under certain restrictions with respect to the location of firms and consumers in the market. This result is valid for both the linear and the circular models

Keywords: Product differentiation; circular model; linear model; quadratic transportation costs; sequential equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D43 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2007-01
New Economics Papers: this item is included in nep-com, nep-geo and nep-mic
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