No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
Spatial Price Discrimination
... The choice of the spatial price policy by farms, i.e., whether or not to pay different prices to different landowners depending on their land's proximity to the farmstead, has important consequences for (farm) profit, income (of the landowners), and total welfare (GRAUBNER, 2020). On the one hand, the use of price discrimination itself is an indicator of market power (HOOVER, 1937). On the other hand, different price policies might be beneficial for the farm depending on the competitiveness of the (local land) market, which influences the welfare distribution (ZHANG and SEX- TON, 2001). ...
... Moreover, studies on land markets in particular (GRAUBNER et al., 2021;GRAUBNER, 2018) and contributions concerning spatial input (GRAUBNER et al., 2011b) or consumer markets in general (HOOVER, 1937;CAPOZZA and VAN ORDER, 1978;GRONBERG and MEYER, 1981) highlight that the competitive conduct of market participants crucially affects market allocation. The spatial dimension of markets and repeated interaction can foster cooperative competition (ESPINOSA, 1992). ...
This paper provides review about challenges and opportunities to assess and quantify market power in agricultural land markets. Measuring land market power is challenging because the characteristics of this production factor hinder the direct application of familiar concepts from commodity markets. Immobility, fixed availability, and large heterogeneity of land and potential users contradict assumptions of fictitious point market for homogeneous goods. Moreover, the use of concentration indicators for policy assessments is hampered by two problems. First, defining the relevant regional size of the market is challenging and concentration indicators are not robust with regard to market size and number of actors. Second, high concentration of land ownership or land operation may point at potential market power, but it may also be the result of an efficient allocation of land due to structural change in agriculture. The aforementioned challenges are illustrated with a case study for the Federal State of Brandenburg in Germany. Using available data for land sales, a regression analysis reveals a negative relationship between land use concentration and farmland prices. This result can be interpreted as an indication of market power on the buyer side in agricultural land markets. However, it is hardly possible to translate this finding into recommendations for land market regulations because the evaluation of the potential misuse of dominant positions in land markets requires a case-specific analysis. Providing evidence for the exertion of market power in land markets is extremely complex and deserves further attention from researchers and politicians.
... In industry cluster literature, urbanization economies are described by conditions that stem from the urban size or urban industrial diversity. Hoover (1937) defines urbanization economies as dynamics that are external to both the business and the industry, but internal to an urban geographical area. We follow this definition by stressing that urbanization economies describe conditions that are only external to the media cluster and that are exclusively enabled by cities. ...
... Bruneel, Spithoven, & Maesen, 2007) go as far as questioning the relevance of proximity between firms in a cluster and the resulting benefits. Hoover (1937) defines agglomeration economies as external to the firm but internal to the industry. ...
There is no consensus in the literature about how successful media clusters can be developed. Using insights from workshops and survey data, this study develops and tests a new model that explains why media activities agglomerate at certain places. The model consists of four economic drivers: urbanization, localization, agglomeration and perception economies. The findings emphasize that a one-size-fits-all policy regarding media cluster development is best avoided, due to the high levels of heterogeneity in the conditions for success.
... However, the seeds of NEG can already be found in Krugman's article from 1979 which, in its final section, argues that patterns of migration can be analyzed within the same framework as the NTT. Of course, from an historical point of view, it would be reductionist to overlook earlier works regarding the concentration of economic activities in a specific location that preceded NEG, such as Marshall (1890), Weber (1909), Hoover (1937), or to the Central Place Theory by Christaller (1933) and Lösch (1940). Furthermore, Von Thünen's seminal The Isolated State dating back 1826 was arguably the first general equilibrium model to combine comparative advantages, theories of rents, factorsand-goods pricing, and a system of input-output to explain agricultural land use and rent in concentric rings surrounding a single town. ...
... 3, dating back to as far as Von Thünen's model of land use and rent in The Isolated State in 1826. In fact, Von Thünen is widely regarded as the first attempting to develop a general location theory which included ideas that were elaborated upon separately by theorists such as Launhardt (1885), Marshall (1890), Weber (1909), Hotelling (1929), Hoover (1937), Ohlin (1933), Christaller (1933), Lösch (1940), or Isard (1949. However, spatial economics remained at the periphery of economics until the 1990's. ...
This work consists of a survey of the academic work of Paul Robin Krugman. It seeks to shed light on his main contributions to economic theory, mainly those for which he was awarded the Nobel Prize in Economics in 2008. His legacy in academia can be assessed through the recognition of his work on the identification of international trade patterns and the explanation on why spatial imbalances in the distribution of economic activities arise in an increasingly globalized economy. Through these contributions to trade theory and economic geography, Krugman is often credited as being one of the pioneering researchers in the New Trade Theory and the founding father (together with Masahisa Fujita) of the New Economic Geography.
... In industry cluster literature, urbanization economies are described by conditions that stem from the urban size or urban industrial diversity. Hoover (1937) We follow this definition by stressing that urbanization economies describe conditions that are only external to the media cluster and that are exclusively enabled by cities. We suggest to include the following conditions and factors to describe urbanization economies in more detail: (a) access to good transport infrastructure including public transport and proximity to an airport and international railways (which can be typically found in cities); (b) the closeness to potential clients, for example target audiences and readers; (c) access to typically urban infrastructures and facilities, like governmental agencies, associations and other supporting institutions, universities and research institutions (cf. ...
... Bruneel, Spithoven, & Maesen, 2007) go as far as questioning the relevance of proximity between firms in a cluster and the resulting benefits. Hoover (1937) defines agglomeration economies as external to the firm but internal to the industry. ...
This report is dedicated to Work Package 3 – Media organization’s cluster logic and value generation of the Media Clusters Brussels project. Work Package 3’s goal is to analyse Brussels’ media clusters’ geographical organisation and the resulting cluster dynamics. This Deliverable is built on the findings of Work Package 2, which identified media clusters in Brussels. These clusters are in this Deliverable further analysed to find the features and dynamics that drive these clusters. This Deliverable is a working paper, that is foreseen to be submitted as article for publication. The analysis was supported Dr. Máté Miklós Fodor (ISE, Université Libre Bruxelles), who co-authored the Deliverable.
... Many other studies have followed this approach (Anderson and Neven, 1991;Gupta et al., 1997;Chamorro-Rivas, 2000;Benassi et al., 2007). The analysis via prices or price discrimination was first developed by Hoover (1937) and Lerner and Singer (1937). Other authors have extended their results to a more formal framework such as Hurter and Lederer (1985) and Lederer and Hurter (1986). ...
... It should be highlighted that the optimization strategies of firms are not modified when a green zone is introduced. This type of equilibrium was first identified by Hoover (1937). With spatial price discrimination, the strategy set are much "broader" since each firm chooses a price function rather than a single mill price, that is, has more flexibility in its price choice. ...
This study aims to examine urban zoning within a linear city in a Bertrand
duopolistic competition framework with price discrimination and linear
transportation costs. It analyses the effects of introducing an environmental area
where economic and residential activity are not allowed. The welfare function used
to determine the optimal size of the green area allows for a possible regulator’s
bias in favour of firms/consumers. It is shown that location-price competition can
be either reduced or increased depending on the size of the green area. The results
indicate when a regulator implements green zoning, under linear transportation
costs, influences the optimal location of firms (because these locations depend on
the size of the green zone). In consequence, zoning may be used as an effective
industrial or urban policy tool.
... Two early contributions modified the demand side of the specification. As we already noted above, Lerner and Singer (1937) introduce a finite reservation price (while maintaining the assumption of inelastic individual demand for lower prices), 20 Hoover (1937) considers elastic demand and price discrimination. 21 Hotelling (1929, p. 55) mentions the possibility of three or more sellers, as do Chamberlin (1933, p. 260-262) and Lerner and Singer (1937, Sec. ...
We discuss Harold Hotelling’s seminal paper “Stability in Competition,” some of the literature that built upon it, and introduce the papers in the special issue.
... Spatial price discrimination means that firms can set locational discriminatory prices, which has been studied by Hoover (1937), followed by Hurter and Lederer (1985), Thisse and Vives (1988) and Vogel (2011). This classical issue has recently attracted the attention of policy makers due to the rapid development of online-offline competition in the past two decades. 1 We explore this issue in further depth by incorporating online competition and establishing a novel urban/rural framework to explore the relocation tendency of offline retailers and partially equalized price patterns, as well as corresponding zoning implications. ...
We contribute to the previous offline spatial price discrimination by adding an online entrant that results in partially equalized prices, and the urban (rural) segments are served by the offline (online) firms. The presence of online competition prompts offline firms to relocate nearer to the market center. The online firm’s advantage in servicing remote areas grants it market power, enabling it to mark up its prices. This leads to a shift in the equilibrium locations of firms, causing them to diverge from socially optimal positions. The magnitude of this online advantage directly influences market dynamics: a greater advantage correlates with higher online prices, a reduced dispersion of offline firm locations, and decreased offline prices in urban regions. Finally, zoning policies and two extensions of online price discrimination and multiple offline firms with free entry are offered.
... The notion of NE is probably the most used solution concept in non-cooperative games (Eichberger 1993), however such equilibrium may not exist. For completely inelastic demand and constant marginal production cost, Hoover (1936) analyzed the location game considering each firm locates one facility, and determined that the equilibrium market price of a firm with the lowest delivery cost is equal to the next lowest delivery cost. This result was extended to a spatial duopoly on a compact subset of the plane by Lederer and Hurter (1986) and to a network by Lederer and Thisse (1990). ...
We address the location-price decision problem for firms that offer the same type of product and compete on delivered pricing. If firms set equilibrium prices at demand points, the problem can be seen as a location game for which the Nash equilibrium (NE) is used as solution concept. For spatially separated markets, with inelastic demand, there exists a NE and it can be found by social cost minimization, as happens in network and planar location. However, with price sensitive demand, the existence of a NE has not been proven yet and socially optimal locations may not be a NE. In this paper we show that a NE can be found in discrete and network location when demand is price sensitive. A Mixed Integer Linear Programming formulation is implemented in the best response procedure which allow to find a NE for a variety of demand functions. An empirical study with data of Spanish municipalities is performed in which the procedure is applied to 200 large size test problems with linear, quadratic, exponential and hyperbolic demand functions.
... The research on price discrimination in the classical literature focuses on the segmented pricing represented by quantity discount [4], and segment pricing represented by customer classification [5]. ...
The rapid development of Internet technology in the digital economy era provides conditions for enterprises to adopt a more accurate segmented pricing strategy. Information collection technology will lead enterprises to adopt discriminatory pricing strategies, which may make enterprises lack the power to improve product quality, and more adopt discriminatory pricing to gain competitive advantages and consumer surplus. Based on combing the existing literature, this paper mainly analyzes the application of segmented pricing strategy in enterprises and its impact on consumer surplus in the digital economy era. The analysis results show that enterprises cannot fully obtain consumer surplus through segmented pricing but can more accurately provide customized prices for different groups of customers. The use of segmented pricing by enterprises is conducive to the increase of the overall welfare of consumer groups.
... The first proposed approach is that of the classical economists who divide this approach into two basic currents: The Marshallian perspective or the theory of interaction and the industrial districts, exposed by Marshall (1890) and the theory of industrial location with contributions from Weber (1929) and Hoover (1937) later Krugman (1995) and Borja and Castells (1997). ...
El objetivo principal de esta investigación es brindar un panorama general referente del concepto del clúster, a través de la revisión de estudios teórico-empíricos y algunos modelos propuestos, así como su importancia como estrategia para el desarrollo regional y su funcionamiento. La metodología utilizada se basa en una revisión analítica de enfoques teóricos relevantes en fuentes secundarias de referencias. Se concluye que los supuestos de una definición conceptual de clúster es que es un grupo de empresas que realizan las mismas actividades o actividades estrechamente relacionadas hacia atrás, hacia adelante y hacia los lados. El clúster como economía de innovación puede ser una estrategia de desarrollo regional natural formada por la oferta y la demanda y creada artificialmente a través de políticas públicas para incentivar el desarrollo de una región.
... For a discussion on the business-stealing effect in free entry markets, seeMankiw and Whinston (1986). 5 See alsoHoover (1937) for pioneering discussions of delivered pricing models andLederer and Hurter (1986) for the properties of the delivered pricing model in general space. The delivered pricing model is often referred to as a spatial price discrimination model or a shipping model.2 ...
This study investigates how common ownership affects the location choice of duopolists. We formulate a shipping (delivered pricing) model on the Hotelling line in which firms choose their locations and then compete in prices. We show that even if high prices due to common ownership do not reduce welfare under inelastic demand, common ownership can still lead to welfare loss by promoting dispersion among firms. We also find that common ownership promotes transport cost-reducing investments and accelerates welfare loss in excessive investments.
... Another branch of the literature examines oligopoly price discrimination when consumers can be informed about prices without costly advertising. One strand, dating from Hoover (1937) through to Lederer and Hurter (1986) and Thisse and Vives (1988), focuses on spatial competition. 6 Thisse and Vives consider duopolists who can charge location-speci…c prices to consumers. ...
We study list price competition when firms can individually target consumer discounts (at a cost) afterwards, and we address recent privacy regulation (like the GDPR) allowing consumers to choose whether to opt-in to targeting. Targeted consumers receive poaching and retention discount offers. Equilibrium discount offers are in mixed strategies, but only two firms vie for each contested consumer and final profits on them are Bertrand-like. When targeting is unrestricted, firm list pricing resembles monopoly. For plausible demand conditions and if targeting costs are not too low, firms and consumers are worse off with unrestricted targeting than banning it. However, targeting induces higher (lower) list prices if demand is convex (concave), and either side of the market can benefit if list prices shift enough in its favor. Given the choice, consumers opt in only when expected discounts exceed privacy costs. Under empirically plausible conditions, opt-in choice makes all consumers better off.
... Spatial price discrimination means that firms can set locational discriminatory prices, which has been studied by Hoover (1937), followed by Hurter and Lederer (1985), Thisse and Vives (1988) and Vogel (2011), and this classical issue recently has attracted the attention of policy makers due to the rapid development of online-offline competition in the past two decades. 1 We explore the issue in further depth by incorporating online competition and establishing a novel urban/rural framework to explore the relocation tendency of offline retailers and partially equalized price patterns, as well as corresponding zoning implications. ...
We contribute to the previous offline spatial price discrimination by adding an online entrant that results in partially equalized prices, and the urban (rural) segments are served by the offline (online) firms. Online competition induces the offline firms to move closer to the market center, which causes the equilibrium locations to no longer be the social optimum due to the online price distortion. The greater the online advantage is, the higher the online price, the less dispersed the offline locations, and the lower the offline prices will be in urban areas. Finally, zoning policies and two extensions of online price discrimination and multiple offline firms with free entry are offered.
JEL Classification Numbers. R30, L13
... Alternatively, in a spatial competition setting, the price game may incorporate spatial price discrimination ( Hoover 1937 ;Greenhut and Greenhut 1975 ) . Instead of setting prices at their firm's location, sellers may choose 'delivered prices'. ...
Contractors will play a vital role in providing farms with access to new precision farming technologies, especially in small scale farming systems. We investigate the impact of spatial competition among contractors on the uptake of precision farming and the effectiveness of policy interventions, considering alternative spatial price schedules. Conceptual analyses show that a lack of spatial competition among contractors hinders uptake of precision farming technology. The effectiveness of policy interventions to support precision farming also depends on the market structure and contractors’ price schedules. In addition, we illustrate the results in a Swiss case study based on a specific contractors’ service market of plant protection technologies.
... The first proposed approach is that of the classical economists who divide this approach into two basic currents: The Marshallian perspective or the theory of interaction and the industrial districts, exposed by Marshall (1890) and the theory of industrial location with contributions from Weber (1929) and Hoover (1937) later Krugman (1995) and Borja and Castells (1997). ...
The main objective of this research is to provide a general overview of the concept of the cluster, through the review of theoretical-empirical studies and some proposed models as well as its importance as a strategy for regional development and its operation. The methodology used is based on an analytical review of relevant theoretical approaches in secondary sources of references. It is concluded that the assumptions of a conceptual definition of cluster is that is a group of companies performing the same or closely related activities backward, forward, and sideways. The cluster as an innovation economy can be natural regional development strategy formed due to supply and demand and artificial created through public policies to encourage the development of a region. Resumen El objetivo principal de esta investigación es brindar un panorama general referente del concepto del clúster, a través de la revisión de estudios teórico-empíricos y algunos modelos propuestos, así como su importancia como estrategia para el desarrollo regional y su funcionamiento. La metodología utilizada se basa en una revisión analítica de enfoques teóricos relevantes en fuentes secundarias de referencias. Se concluye que los supuestos de una definición conceptual de clúster es que es un grupo de empresas que realizan las mismas actividades o actividades estrechamente relacionadas hacia atrás, hacia adelante y hacia los lados. El clúster como economía de innovación puede ser una estrategia de desarrollo regional natural formada por la oferta y la demanda y creada artificialmente a través de políticas públicas para incentivar el desarrollo de una región. Palabras clave: Clúster, economía de la innovación, funcionamiento, desarrollo regional Clasificación JEL: R110, L14, L22.
... In any case, it is important to note that all price strategies, except FOB pricing, feature spatial price discrimination (Greenhut et al. 1987) because sellers receive a price that does not fully reflect the costs associated with the trade, i.e., the transportation costs in a spatial setting. 5 Any strategy different from FOB pricing Normalized transportation costs: measure of the intensity of competition determined by tD/ϕ, i.e., transportation cost (per distance unit) times the market length relative to the net output price is therefore an indicator of (local) market power because this is a precondition to employ spatial price discrimination (Hoover 1937). The extent to which local market power can be exploited under any spatial price policy depends on the intensity and nature of spatial competition. ...
Agricultural economists have a long history of emphasizing and analyzing the spatial dimension of agricultural and food markets. Despite a rich body of literature and important contributions to agricultural and spatial economics, one aspect is frequently disregarded: the oligopsonistic nature of agricultural markets due to spatial competition of neighboring buyers of farm products. This review presents the theoretical foundations of spatial pricing, competition, and location in terms of buyer power and discusses concepts that are relevant for agricultural markets. By providing a comprehensive overview of prior work, we highlight the multifaceted areas of applications to agricultural markets. Additionally, we discuss future research avenues for and challenges of the analysis of spatial competition in agricultural economics.
Expected final online publication date for the Annual Review of Resource Economics, Volume 13 is October 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.
... The first proposed approach is that of the classical economists who divide this approach into two basic currents: The Marshallian perspective or the theory of interaction and the industrial districts, exposed by Marshall (1890) and the theory of industrial location with contributions from Weber (1929) and Hoover (1937) later Krugman (1995) and Borja and Castells (1997). ...
Abstract
A cluster is an important way to increase the economic development in a region. The discussion
about the most suitable meaning of a cluster is breadth. For this reason, the main aim of this
research was to provide a general overview of the concept of the cluster. The methodology is
a review of literature of the main theoretical- empirical studies and models and some proposed
models as well as its importance as a strategy for regional development and its operation. The
main conclusions are that all the theoretical approaches to the concept are relevant and that
does not exist a unique approach to define cluster
... It is well known since Hoover (1937) and Singer (1937) that firms in spatial markets have incentives to practice price discrimination based on customers' locations through absorbing some or all shipping costs. Their idea is that by lowering shipping costs to distant customers at the cost of higher price to nearby ones, firms can sometimes extend their market territories. ...
Spatial pricing means a retailer price discriminates its customers based on their geographic locations. In this article, we study how an online retailer should jointly allocate multiple products and facilitate spatial price discrimination to maximize profits. When deciding between a centralized product allocation ((i.e., different products are allocated to the same fulfillment center) and decentralized product allocation (ie, different products are allocated to different fulfillment centers), the retailer faces the tradeoff between shipment pooling (ie, shipping multiple products in one package), and demand localization (ie, stocking products to satisfy local demand) based on its understanding of customers' product valuations. In our basic model, we consider two widely used spatial pricing policies: free on board (FOB) pricing that charges each customer the exact amount of shipping cost, and uniform delivered (UD) pricing that provides free shipping. We propose a stylized model and find that centralized product allocation is preferred when demand localization effect is relatively low or shipment pooling benefit is relatively high under both spatial pricing policies. Moreover, centralized product allocation is more preferred under the FOB pricing which encourages the purchase of virtual bundles of multiple products. Furthermore, we respectively extend the UD and FOB pricing policies to flat rate shipping (ie, the firm charges a constant shipping fee for each purchase), and linear rate shipping (ie, the firm sets the shipping fee as a fixed proportion of firm's actual fulfillment costs). While similar observations from the basic model still hold, we find the firm can improve its profit by sharing the fulfillment cost with its customers via the flat rate or linear rate shipping fee structure.
... Prior to NEG, there were many works in spatial economics that addressed the agglomeration of industry within a city or a system of cities, dating back to as far as von Thünen's model of land use and rent in The Isolated State in 1826. In fact, von Thünen (1826) was the first attempt to develop a general location theory which included ideas that were elaborated upon separately by theorists such as Launhardt (1885), Marshall (1890), , , Hoover (1937), Ohlin (1933), Christaller (1933), Lösch (1940) or Isard (1949). Notwithstanding, spatial economics remained at the periphery of economics until the 1990s. ...
The chapter considers the introduction of a mixed ownership firm into a classic model in which downstream firms locate strategically so as to achieve accommodating upstream price reductions. These reductions happen endogenously but the strategic locations harm welfare. It shows that a mixed ownership firm downstream can limit such inefficiency but that its ability to do so depends on the extent to which its costs match those of a private firm. Thus, reconfirming in this spatial setting that the optimal share of privatization set by a government depends positively upon the cost disadvantage of the public firm.
... Prior to NEG, there were many works in spatial economics that addressed 79 the agglomeration of industry within a city or a system of cities, dating 80 back to as far as von Thünen's model of land use and rent in The Isolated 81 State in 1826. In fact, von Thünen was the first attempt to develop 82 a general location theory which included ideas that were elaborated 83 upon separately by theorists such as Launhardt (1885), Marshall (1890), 84 Weber (1909), Hotelling (1929), Hoover (1937), Ohlin (1933), Christaller 85 (1933), Lösch (1940) or Isard (1949). Notwithstanding, spatial economics 86 remained at the periphery of economics until the 1990s. ...
This chapter provides a comprehensive view on the field of New Economic Geography (NEG). It starts by describing the background in adjacent fields of economics which made the surge of NEG possible. It lays out the necessary ingredients and fundamental forces at work that define any NEG framework and provides a pedagogical description of a simple and analytically solvable Core-Periphery model. It then assesses the state of the art in NEG and tracks the evolution of the field, focusing on the several contributions that emerged from the cross-fertilization between NEG and adjacent fields in economics and highlighting the persistent features and assumptions which have thwarted further developments and led to a sprawl of criticism within the field. This criticism has led to the identification of new possible directions, some of which are being progressively undertaken. These new developments have come to shed light on various features of the space economy, such as the regional growth, the spatial sorting of heterogeneous agents and the hierarchical formation of urban systems, among other aspects.
... More than a century later, Samuelson (1983) provided a closed solution to this general "spatial" equilibrium model, in which the real wage common to all workers is endogenous. Von Th€ unen was the first attempt to develop a general location theory which included ideas that were elaborated upon separately by theorists such as Launhardt (1885), Marshall (1890), Weber (1909), Hotelling (1929), Hoover (1937, Ohlin (1933), Christaller (1933), L€ osch (1940), or Isard (1949. In spite of this, his contribution to economic thought remained in the shadow of mainstream economics for several decades. ...
We synthesise the main conceptual discussion around New Economic Geography (NEG). We provide the background in adjacent fields of economics which made the surge of NEG possible. We then assess the state of the art in NEG and track the intellectual evolution of the field, focussing on the intrinsic criticism that it has been subject to throughout its history. This criticism has its roots in different conceptions of geography and history, as well as other methodological differences between economists and geographers. We analyse the evolution of the debate and communication between geographical economists and economic geographers.
... See, also,Görg, Halpern, and Muraközy (2017), Skiba (2015, 2016),Manova and Zhang (2012), andMartin (2012). An older literature on spatial price discrimination studies how …rms adjust their markups depending on the distance to the buyer(Greenhut, Ohta, and Sailors, 1985;Hoover, 1937). "Dumping" and "reverse dumping" arise if …rms charge lower or higher markups in more distant countries.2 ...
We investigate theoretically and empirically how exporters adjust their markups across destinations depending on bilateral distance, tariffs, and the quality of their exports. Under the assumption that trade costs are both ad valorem and per unit, our model predicts that markups rise with distance and fall with tariffs, but these effects are heterogeneous and are smaller in magnitude for higher quality exports. We find strong support for the predictions of the model using a unique data set of Argentinean firm-level wine exports combined with experts wine ratings as a measure of quality.
... Instead, firms might work as cluster to take advantage of external economies that result from close proximity to a large number of other firms. Following Hoover [36], these external economies may include: i) agglomeration economies that result from firms working in the same sector and in the same area, and ii) urbanization economies, which result from the sharing of costs between firms and urban inhabitants. These external benefits increase by the growth of the number and the outputs of localised firms; they are usually named as external economies of scale . ...
The paper focuses on territorial impacts of the European policy with regards to the enterprise systems in the last decade and how the effects of this policy could have irreparable modified the enterprise network relationships (socio-functional and interrelated/cohesive) in regions. This suspicion has suggested European choices include the territorial dimension in the development directions by the intra and interregional cooperation. The searching new forms of balanced growth for enterprise is the future objective; it could be followed by assuming a territorial polycentric cohesive organization. Important European documents, like Europe 2020 Strategy and Territorial Agenda (2011), stress this orientation. A critical review of Economic Geography literature with regards to main localisation theories of enterprise opens this contribution, in order to accompany the reader in understanding of new strategic parameters able to measurèthe regional productive capability' of enterprises in the framework of European recent directions. By using innovative methodologies, the performance of enterprise systems and networks looking at these parameters, highlights European specific territorialised typologies of behaviour. Finally, some policy recommendations are suggested in this direction in order to improve the regional productivity, as well as the employment in relation with to specific economic-social-environmental parameters of cohesion and competitiveness in sustainability, looking at the regional productive capability of Small/Medium Firms (SMFs) in Europe with regards to main pillars of the 2014-2020 Strategy. The review and comparison of relevant theoretical/academic literature identify key concepts and definitions with regards to competitiveness and sustainability, and, more recently, to cohesion. In the 1990s, the literature on competitiveness, sustainability and cohesion is developed under different and no linked scientific domains; the research on the competitiveness performance concerning enterprises is the largest and more dynamic. Since the 2000s, interdisciplinary relationships among these three concepts are developed. Initially, competitiveness is considered by different forms of access to foreign markets and as one of the main factors of the theory of international exchange the study of the behavior and strategy of the enterprise. The basic causes of competitiveness were to be studied according to diverse starting resources and different technological levels, in relation to scale performances and to the change of the factors prices and assets [4, 16, 20, 32]. A few works only extend the analysis to the role of the access procedures to foreign markets (internationalization) 1. The internationalisation of the enterprises was only one of the components influencing the firm's competitiveness and its role could be estimated only in comparison to that of other traditional competitiveness factors. For example, trough the microeconomic analysis, competitiveness 1 i.e. the researches on Mediterranean regional economies, where small and medium enterprise is dominant [63, 84]; or the ones that apply the "real option theory" [21 ]introducing the concept of sunk costs (information costs, opportunity costs and travel costs of the human resources).
... Economic centres started feeling the importance of strategic location; this led to the development of concepts that could answer the issues around location. Traditional location theory authors, such as Ohlin (1933), Hoover (1937) and Hakimi (1964), have developed the first concepts around location theory. Although these traditional concepts seem not to give a complete answer to the objectives of today's companies concerned with their location, they are the foundation of today's location theories (Marianov and Serra, 2002). ...
Purpose
The determination of the appropriate site for the location of a research institute represents a multi-criteria problem which requires a scientific approach for decision-making. The research centre in this study is an institute that intends to carry out the state-of-the-art research activities and provide the requisite skills to expedite and optimize the manufacturing of rail cars in South Africa. Hence, the selection of a suitable and conducive location capable of achieving these aforementioned objectives in an effective manner is a problem which requires scientific justification for the allocation of the weights and biases. In light of this, using various decision techniques, this paper aims to establish a suitable framework for the location selection of the research institute which is capable of meeting the short- and long-term objectives of the institute.
Design/methodology/approach
This aim was achieved by ascertaining the suitability of potential location alternatives using the factor rating (FR) and centre of gravity (CoG) technique.
Findings
The CoG revealed that any location within the longitude of 28.28 and latitude of −25.75 (with a Cartesian coordinate position of 5053.62; 2718.69) is suitable for the research institute, while the result of the FR/weighted score matrix revealed that location J 3 with a weighted score of 72.6% is the most suitable location for the research institute with the longitude of 5053.62 and latitude of 2718.69.
Practical implications
The results of this paper helped decision-makers in locating the given research institute which is currently operational.
Originality/value
The present study is focussed on the application of location decision techniques in the research institute scenario. The combination of FR and CoG techniques for the selection of the most suitable location for a research institute amidst conflicting criteria has not been widely reported by the existing literature.
... In a spatial monopolistic setting, Hoover (1937) was the first to highlight the effects of spatial price discrimination where distance costs are not fully reflected in price differences between two locations (Phlips, 1983). A prominent example is uniform pricing, where the monopolist absorbs the freight costs and sets a uniform price across the market region. ...
Decoupled direct payments are a major tool of agricultural policy to support farm income. Since these subsidies are tied to land, the question arises as to who benefits from them when farmers are not the landowners. While theoretical models commonly predict that most of the payments transfer to land prices, empirical findings show that this incidence is low instead. Approaching the issue from the perspective of spatial competition, this paper produces results consistent with empirical evidence. Incidence varies with the competitiveness of the market, ranging from perfect subsidy transfer under specific conditions to low or zero incidence for most of the cases considered.
... In addition, an emerging application area can be for distribution companies and online stores that serve customers who prefer to receive their required goods at their places at higher prices, while they can directly buy them from the existing shopping stores. Even if the market is not segmented, these companies are legally allowed to discriminate delivered prices offered to different zones because the distances of demand zones to their distribution centers are not the same and because people in different zones may have different demand rates depending on factors, such as the accessibility to the physical shopping stores, traffic intensity, social class, etc. Spatial price discrimination is the ability to charge different prices to consumers at different locations ( Anderson, de Palma, & Thisse, 1989;Fackler & Goodwin, 2001;Hoover, 1937;Lambrecht et al., 2012;Varian, 1989 ). Delivered pricing is a type of spatial price discrimination where the price offered to a customer is inclusive of transport charges and is dependent on the customer's location ( Basu, Ingene, & Mazumdar, 2004;Carlton, 1983;Espinosa, 1992 ). Another important application of our PM-LRP is for the case that the demands are not price sensitive. In this case, we obtain the most basic LRP with profit, which can be used in designing distribution networks in various industrial applications of VRPPs, reviewed by Archetti et al. (2014) . ...
This paper for the first time considers a profit-maximization location-routing problem with price-sensitive demands. The problem determines the location of facilities, the allocation of vehicles and customers to established facilities, and the pricing and routing decisions in order to maximize the total profit of serving customers. A mixed-integer linear programming model is presented, which can only be used to solve small-size instances with commercial optimization solvers. Then, the model is reformulated as a set-packing model and solved by an efficient branch-and-price algorithm for large-size instances. The proposed algorithm can also be used to solve the more basic location-routing problem with profit where demands are not price-sensitive, which has not been considered by any research earlier. Our numerical study indicates the substantial advantage of the integrated model.
... Agglomeration economies are at the heart of much work in economic geography and the term is often referred to as economic externalities of co-location. They have been at the core of a huge body of research literature which, despite the common framework, analyzes the issue through different perspectives (see Martin and Sunley, 2003;Phelps, 2004 for critical overviews), aside from the widely adopted and classical conceptual trio ( Ohlin, 1933;Hoover, 1937;Glaeser et al., 1992) coupled with the Alonso, Mills and Mutt model-economies of scale, localization economies (MAR-externalities) and urbanization economies (Jacob's externalities). However, they do not, and cannot, cover all aspects of the concept. ...
... Here (1 + c)/2 is the optimal price at the mill. To this is added half of the freight cost X, a result first reported by Singer (1937). ...
... 8 In this case transportation cost is usually viewed as a convex function of distance (Thisse and Vives, 1988). In the geographical context, it is usually assumed that, due to economies of scale in transportation, transportation costs are concave (see, for example, Hoover, 1937, andVives, 1988), but for the sake of computational simplicity the standard assumption in the literature of spatial competition is that transportation costs are linear. However, some factors may penalize long-distance freight; for instance, there may be congestion along the transport route (for example, transportation downtown). ...
We analyze the consequences of consumers' behavior concerning personal arbitrage in a spatial discrimination context where firms know consumers distribution but cannot distinguish them by location. The firms' equilibrium pricing policies provide incentives for consumers not to demand their preferred varieties of products but rather to purchase more standard varieties. This behavior may explain a decrease in observed market diversity: the demanded varieties tend to agglomerate around the center of the market. We also deal with efficiency in the presence of personal arbitrage and show that it is efficient for the cost of adapting the product to the consumers needs to be shared through arbitrage, but oligopoly gives rise to an inefficient level of personal arbitrage.
... Instead, firms might work as cluster to take advantage of external economies that result from close proximity to a large number of other firms. Following Hoover [36], these external economies may include: i) agglomeration economies that result from firms working in the same sector and in the same area, and ii) urbanization economies, which result from the sharing of costs between firms and urban inhabitants. These external benefits increase by the growth of the number and the outputs of localised firms; they are usually named as external economies of scale . ...
The paper focuses on territorial impacts of the European policy with regards to the enterprise systems in the last decade and how the effects of this policy could have irreparable modified the enterprise network relationships (socio-functional and interrelated/cohesive) in regions. This suspicion has suggested European choices include the territorial dimension in the development directions by the intra and inter-regional co-operation. The searching new forms of balanced growth for enterprise is the future objective; it could be followed by assuming a territorial polycentric cohesive organization. Important European documents, like Europe 2020 Strategy and Territorial Agenda (2011), stress this orientation. A critical review of Economic Geography literature with regards to main localisation theories of enterprise opens this contribution, in order to accompany the reader in understanding of new strategic parameters able to measure `the regional productive capability' of enterprises in the framework of European recent directions. By using innovative methodologies, the performance of enterprise systems and networks looking at these parameters, highlights European specific territorialised typologies of behaviour. Finally, some policy recommendations are suggested in this direction in order to improve the regional productivity, as well as the employment in relation with to specific economic-social-environmental parameters of cohesion and competitiveness in sustainability, looking at the regional productive capability of Small/Medium Firms (SMFs) in Europe with regards to main pillars of the 2014-2020 Strategy.
Organizations continuously endeavour to enhance their decision-making processes. With the advancement in information system, customers are becoming more attentive towards the market condition, competition and, the availability of substitute products. Therefore, instead of placing fixed demand, customers vary demand in response to market dynamics. To capture these factors, the model takes into account the dynamic nature of customer behaviour and incorporates the “law of demand” theory into the price-demand relationship, assuming demand to be a concave function of the price of goods. The study examines a location-price game to identify equilibrium location for firm operating in a foresight competitive market where firms first choose their respective locations and then establish delivered prices to maximize profits. To maximize profit while meeting customers demand satisfactorily, firms compete for providing the goods at a minimum price in minimum time. Due to the NP-hardness of the problem, even the small data set requires excessive computational time by the conventional method. Therefore, to addresses computational challenges associated with this complex CFL model the study employed a two-phase exploration and exploitation based heuristic. Comparative analysis against established algorithms across 33 datasets reveals that the proposed heuristic perform extremely well within negligible computational time across all cases. The study aims to provides insights for managers involved in foresight planning of facility location and pricing, offering a competitive advantage in today's rapidly evolving marketplace.
We address the facility location problem for firms that sell an homogeneous product and compete on delivered prices. If the firms set equilibrium prices at each market, the problem can be seen as a location game for which there exists a Nash equilibrium if demand is inelastic. However, this equilibrium may be Pareto-inefficient and the firms could decide to collude if they can guarantee themselves higher payoffs than those prescribed by the equilibrium. The aim of this paper is to study the joint profit maximization problem to obtain a collusive solution of the location game (Pareto-efficient) and determine if such a solution is also a Nash equilibrium. We develop Integer Linear Programming models to find Pareto-efficient solutions for multiple and single facility location. Nash equilibria are obtained by the best response procedure. An empirical investigation is performed to compare the joint profit of the firms and the profit of each one of the firms, got through the Pareto-efficient locations, with those got through the Nash equilibrium.
Los sistemas complejos con sus principios de: autoorganización, interacción,interdependencia, retroalimentación, sensibilidad a las condiciones iniciales, emergenciay adaptación continua constituyen un enfoque teórico novedoso, todavía poco abordadoen el análisis de algunas formas espaciales de organización de la producción y estructurasde mercado, capaces de formar clusters o redes de empresas. Este artículo explora lasbondades teóricas y metodológicas que los sistemas complejos brindan para lograr unamejor compresión sobre el origen y funcionamiento de los clusters. Ahora bien, la teoríaestablece que la competencia imperfecta es la estructura de mercado que subyace en estasformas particulares de organización de la producción -cluster o redes de empresas- y porsu parte los rendimientos crecientes tienen la singular propiedad de favorecer la atraccióny localización de empresas alrededor de una actividad económica en un territorio, es decir,al parecer ciertos atributos les confieren propiedades emergentes, para convertirse en elatractor principal en los procesos de aglomeración de empresas. Este artículo busca amanera de hipótesis determinar si los clusters o redes de empresas constituyen una formade autoorganización espacial de la producción que por sus características intrínsecasconstituye un sistema complejo.
Topicality. The article explores the issue of determining the direction in which the region should develop its foreign economic relations, how to rebuild a regional economic system in order to realize their resources and opportunities for growth in the globalized international economy in the most effective way. Theoretical and conceptual foundations of the regional foreign economic relations development, analysed in this article, determine a role of commodity exports, imports of modern technologies, investment (including foreign capital), innovation, institutional environment and entrepreneurship for regional development. Among other issues addressed in this article, special attention was paid to analysis of changes in regional development paradigms.Aim and tasks. The aim of the article is to study theoretical and conceptual foundations of regional development through by means of regional foreign economic relations amplification. In addition, the objectives of the current study include: highlighting changes of scientific views on paradigms of regional development in terms of areas of amplification of regional foreign economic relations, identification of the main contradictions and temporal context of the proposed theories and concepts of regional development, addition to the main trends in the theoretical and conceptual basis of regional development in recent years.Research results. The article considers a formation of theories and concepts of regional development, which provide for the intensification of regional foreign economic relations. The analysis of theoretical and conceptual bases of regional foreign economic relations amplification testifies the transformation of paradigms of regional development according to a context of times in which there were changes of scientific views on the reasons and consequences of regional growth. The article examines the evolutionary transformation of regional economic development paradigms through the following theories: spatial location theory, theory of international (interregional) trade, Keynesian theories (export base theory and input-output model), neoclassical theories of regional economic development, concepts of economic rationalism, comparative, competitive and common advantages, theories of globalization, sustainable development, regional self-help and endogenous development, a new growth theory. Based on the analysis of the regional development theoretical foundations, the article establishes that the main theories and concepts of regional foreign economic relations mostly focused on consideration of such incentives as: capital investment, technological innovation, foreign trade, agglomeration effect (economies of scale), as well as a level of institution development.Conclusion. The article states that there is no single generally accepted theory for providing scientific approaches to a complementary amplification of regional foreign economic relations. Certain theories and concepts, which form theoretical foundations for the regional foreign economic relations amplification, have relatively practical application only in specific cases. Thus, by means of an application of the postulates of the theory of international and interregional trade, the optimal structure of the external trade turnover of the region and the parameters of determining the commodity positions for import substitution are determined; neoclassical theory of spatial equilibrium serves as a theoretical basis for choosing investment attraction’ direction in prioritized regional production and infrastructure facilities; new regional growth theories (including, of endogenous regional development concept) serve as a theoretical background for choosing tools for foreign economic activity intensification in order to ensure regional development. At the same time, achieving regional growth, in the modern sense, is not possible without considering principles of sustainable development and self-sufficiency of a territory, therefore, an amplification of foreign economic relations in the region, even in a globalized world, should be based mainly on endogenous factors, while strengthening its development with an innovation and investment components from the external environment.
Topicality. The events of recent years (the Covid-19 pandemic, hostilities in Ukraine) have led to a significant increase in world food prices. Thus, the FAO price index in February 2022 reached a historic high of 140.7 percentage points. One of the significant factors in this situation is a significant increase in prices for fertilizers for agriculture, which leads to their shortage. This actualizes the search for a solution to the problem of using sewage sludge as biological resource for sustainable agriculture and ensuring the implementation of sustainable development goals, including goals 2, 6, 11, 12, 15.
Purpose and tasks. The purpose of the article is to analyze various aspects of the use of sewage sludge in agricultural production as one of the promising ways to achieve sustainable development goals.
Results. The content of organic matter in the sludge can improve the physical, chemical, and biological properties of the soil by ensuring better soil cultivation and water retention capacity, especially when dehydrated sewage sludge is used. Biosolids reduce runoff and increase surface water retention. Organic nitrogen in sludge is much less likely to cause groundwater pollution than chemical nitrogen fertilizers. The use of sewage sludge on agricultural land is the best way to recycle the nutrients it contains. Sewage sludge can therefore be considered an important biological resource for sustainable agriculture. Physico-chemical characteristics of sewage sludge of different origin were compared. The concentration of carbon, nitrogen, and phosphorus were similar. Nevertheless, there are some site-specific factors that make each sewage sludge unique and must be taken into account to predict the outcome of sewage sludge treatment. To achieve the goal, an analysis was made of the effect of sewage sludge on the physico-chemical and microbial properties of the soil; its impact on plants and their roductivity; the problems of using soil sludge in agriculture, taking into account its contamination with various ubstances (heavy metals, microplastics and pharmaceuticals), have been studied.
Conclusions. Sewage sludge is a promising fertilizer for sustainable agriculture, taking into account the need for an effective technology for its purification from hazardous substances.
Key words: sustainable agriculture, sewage sludge as resource, plant productivity, priorities of economic use of sewage sludge.
This paper examines how trade costs induced by geographic distance or bilateral tariffs impact the markups of exports differentiated by quality. It relies on a data set that combines Argentinean firm-level wine exports with experts’ wine ratings as a measure of quality. Exporters price discriminate across destinations by raising markups in more distant markets, and by lowering them in high-tariff countries. However, the response of markups to changes in trade costs is heterogeneous and weaker for higher quality exports. These empirical patterns can be predicted by trade models featuring demand functions more convex than log-concave, but less than superconvex. They demonstrate that the variation in firm-level export unit values across markets is not only driven by quality differences but also by markup variation conditional on quality.
Nous nous proposons d'évaluer la sensibilité des mesures de concentration des activités économiques relativement au découpage géographique utilisé. Même si la prise en compte de la géographie dans les travaux économiques est devenue un sujet d'intérêt, des insuffisances dans les méthodes appliquées persistent. Dans le cadre de cette thèse nous mettons en évidence les limites de plusieurs outils couramment appliqués, et plus particulièrement la manière dont le MAUP (Modifiable Areal Unit Problem) les affecte. Dans le premier chapitre nous focalisons notre attention sur les indices de concentration géographique qui servent à appréhender les logiques de localisation des entreprises. Nous constatons que les indices couramment calculés présentent un biais (positif ou négatif selon l'indice) lorsque les données sont agrégées géographiquement. Dans le deuxième chapitre, nous mettons en évidence que les indices qui ne discrétisent pas l'espace, et qui donc ne sont pas sensibles au MAUP, sont néanmoins sensibles à d'autres variables qui rendent difficiles la comparaison des résultats, par exemple lorsque le nombre d'établissements des secteurs ne sont pas égaux. Le troisième chapitre est consacré aux méthodes d'estimation des facteurs de localisation. L'apport de ce travail est la comparaison des résultats avec un modèle de localisation que nous simulons selon plusieurs paramètres (logique de localisation, importance des facteurs, etc). Le dernier chapitre propose un outil qui n'est pas sensible au MAUP pour déterminer de manière objective la zone d'activités économiques pertinentes à partir des flux domicile-travail.
The welfare effects of regulation are of crucial importance to policy makers. To this end, we present a model of n firms with differentiated costs competing in a linear market within the framework of spatial price discrimination. We prove that the Nash equilibrium locations of firms are always socially optimal irrespective of the number of competitors, the distribution of consumers, firms' cost heterogeneity, the level of privatization, and the number and/or the varieties of the produced goods. We also provide an algorithm on how to find the unique Nash equilibrium in the case of uniformly distributed consumers.
O artigo investiga o papel das aglomerações nas exportações industriais dos municípios brasileiros durante a primeira década de 2000. Ao estudar como as aglomerações influenciam as exportações, trata-se de buscar indicações sobre a competitividade das regiões do país e, consequentemente, sobre seu desenvolvimento econômico e sua possível tendência de convergência e disparidade regional. Usando a Análise Exploratória Espacial e um modelo Probit, observamos que as aglomerações aumentam a probabilidade de uma região exportar. Além disso, a distribuição das exportações industriais ainda é bastante desigual no espaço brasileiro, com poucas formações de aglomeração de exportações, que se concentram principalmente na porção sul do território. Assim, os demais estados que ainda venham a exportar não usufruem das externalidades positivas geradas nessas aglomerações, tornando ainda mais árdua a atividade exportadora.
The supply chain connecting biofuel processing firms and suppliers of biomass is evolving, and processors face a choice in the collection and pricing strategies they will employ to procure biomass. One option is to pay a single price for biomass collected field-side (processor collection). Another is to pay a single price for biomass at the plant gate (supplier delivery). The literature in this area is relatively young, but there is a sense that the evolution of contracting and pricing structures will dictate the industry's success, and ultimately the costs of producing biofuels from dedicated and non-dedicated energy crops. We examine the collection and pricing choices for a cost-minimizing cellulosic biofuel processor, who initially has monopsony power in feedstock procurement in their collection area. We derive optimal prices, total expenditures on feedstocks, and the collection areas required to meet a processor's fixed input needs. We show that while societal welfare is greatest under supplier delivery; however, the processor will be indifferent between supplier delivery and processor collection unless they are concerned about entry of a competing processor. When this is the case, the processor can use the processor-collection mechanism as an effective deterrent to entry. Numerical simulation based on corn stover for biomass is used to illustrate optimal pricing and the extent of biomass collection areas for different procurement and pricing strategies. We use these findings to calculate the rates at which collection costs increase for a monopsonistic stover processor constrained to a defined procurement area, as might emerge as the industry moves toward commercialization. The derived marginal cost curve for a monopsonistic processor of stover is compared with the marginal cost curve across alternative feedstocks.
In this paper we consider a location and pricing model for a retail #rm that wants to enter a spatial market where a competitor #rm is already operating as a monopoly with several outlets. The entering #rms seeks to determine the optimal uniform mill price and its servers' locations that maximizes pro#ts given the reaction in price of the competitor #rm to its entrance. A tabu seach procedure is presented to solve the model together with computational experience and an example. jel = C61, R32,L81,R12 keywords = competitive location, discrete network location, spatial pricing # Corresponding author: Daniel Serra, Department of Economics and Business, Universitat Pompeu Fabra, Trias Fargas 25-27, Barcelona 08005, Spain. Tel: 34-93-5421666, Fax: 34-93-5421746, e-mail: daniel.serra@econ.upf.es. Paper presented at the 44th North American Meetings of the Regional Science Association International, Bu#alo. y Dept. of Geography and Environmental Engineering, The Johns Hopkins University ...
The aim of the study was to show changes in income received by farmers in countries belonging to the European Union having regard to the factors which are time and location in space. In the performed analysis, we pay special attention to the countries which joined the EU after 2004 (UE 11: Estonia, Czech Republic, Latvia, Lithuania, Poland, Slovakia, Slovenia, Hungary, Bulgaria, Romania and Croatia). The study used data on farms, which are generally in the Eurostat database. Because of the macroeconomic nature of the research used in Economic Accounts for Agriculture (RER). The study used autocorrelation coefficient of Moran. The analyzes were found positive spatial autocorrelation in the period 2004-2013 which confirmed the existence of clusters for the countries belonging to the European Union.
This paper addresses a location-price problem on a transportation network. We suppose that the competing firms select their facility locations, and then they compete on delivered prices with the aim of profit maximization. The firms sell an homogeneous product and the customers buy from the one that offers the lowest price. Under some general conditions, for any locations of the facilities, the existence of a unique price equilibrium is shown. Then the location price problem is reduced to a location game if the competing firms set the equilibrium prices. The aim of this paper is to study this location game for any number of competing firms which locate multiple facilities. For essential products, it is proved that the global minimizers of the social cost are location Nash equilibria. In particular, there exists at least one global minimizer of social cost at the nodes of the network if marginal delivered costs are concave. In this case, an Integer Linear Programming (ILP) formulation is proposed to minimize the social cost. For non essential products, the minimizers of social cost may not be location Nash equilibria. Then a best response algorithm is proposed to find a location Nash equilibrium. If marginal delivered costs are concave, an ILP formulation is given for profit maximization of one firm, assuming that the locations of its competitors are fixed. Finally, the selection of a location Nash equilibrium when there are multiple location Nash equilibria is discussed.
This article provides an introduction into the Hotelling literature of spatial and product differentiation. We examine the impact of the market structure on price competition and equilibrium differentiation. We find that spatial differentiation is not uniformly high or low but depends on a number of market parameters such as transport costs, demand elasticity, number of firms, and density of consumers, among others.
Keywords:
Hotelling applications;
spatial competition;
mill pricing;
discriminatory pricing;
principle of maximum differentiation
Spatial economics has as its remit the study of the use of a finite resource — space. It takes explicit account of the twin facts that economic activities both consume space and are separated by distance. Two principal sets of questions are addressed: how economic agents of various types choose their locations in a spatially extensive economy, and how the market areas of these agents are determined.
Americans generally consider apple pie, hot dogs, and baseball to be uniquely theirs in origin. Less pride of origin is assigned to the Basing Point System, originally known as Pittsburgh-Plus. However, this lack of pride in origin did not characterize American public opinion during the early years of Pittsburgh-Plus. In fact, at the turn of the century, the members of the Industrial Commission (the forerunner to the Federal Trade Commission), most members of the Congress of the United States, and later for many, many years the majority of those on the Supreme Court considered the system to be competitive and hence desirable. Before evaluating its pros and cons, a brief inquiry into its early history is in order.
ResearchGate has not been able to resolve any references for this publication.