Three Equivalent Salop Models and their Normative Representative Consumer
Steffen Hoernig ()
FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia
We show that three location models on the Salop circle, involving linear or quadratic transport cost, and asymmetric locations or fixed benefits, are equivalent: they lead to the same demand functions and consumer surplus. The only exception is the case of asymmetric lo- cations with an even number of firms, which has one less degree of freedom. These models are also fully equivalent to a normative rep- resentative consumer whose indirect utility is given by the standard Salop consumer surplus. This result provides a further unification of location and representative consumer models. JEL codes: D11, D43
Keywords: Salop model; representative consumer (search for similar items in EconPapers)
Pages: 17 pages
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp593
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