Three equivalent Salop models and their normative representative consumer

Steffen Hoernig

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: 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.

Keywords: Salop model; representative consumer (search for similar items in EconPapers)
JEL-codes: D11 D43 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2015
New Economics Papers: this item is included in nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp593

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