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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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IMPACT FACTOR 2016: 0.252
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CiteScore 2016: 0.48

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Source Normalized Impact per Paper (SNIP) 2016: 0.526

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1935-1682
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Volume 12, Issue 1 (Mar 2012)

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Price-Dependent Demand in Spatial Models

Yiquan Gu / Tobias Wenzel
Published Online: 2012-03-11 | DOI: https://doi.org/10.1515/1935-1682.3126

Abstract

This paper introduces price-dependent individual demand into the circular city model of product differentiation. We show that for any finite number of firms, an unique symmetric price equilibrium exists provided that demand functions are not “too” convex. As in the case of unit demand, the number of firms under free entry decreases in the fixed cost of entry while increases in the transportation cost of consumers. However, this number is no longer always in excess of the socially optimal level. Insufficient entry occurs when the fixed and transportation costs are high.

Keywords: spatial models; price-dependent demand; horizontal product differentiation; excess entry theorem

About the article

Published Online: 2012-03-11


Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, DOI: https://doi.org/10.1515/1935-1682.3126.

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©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

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[1]
Yiquan Gu, Alexander Rasch, and Tobias Wenzel
Papers in Regional Science, 2016, Volume 95, Number 4, Page 865

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