Author(s):
Pires, Cesaltina 
Date: 2005
Persistent ID: http://hdl.handle.net/10174/2259
Origin: Repositório Científico da Universidade de Évora
Subject(s): Delivered pricing; Spatial competition
Document details
Constrained efficient locations under delivered pricing
Description
In this article, we extend previous results on competitive delivered pricing by considering the second-best problem in which the social planner can regulate firm’s locations but not their pricing. Assuming constant marginal costs, we show that the constrained socially optimal locations are an equilibrium of the location-price game when: (i) demand is perfectly inelastic and (ii) demand is price sensitive but firms practice first-degree price discrimination. However, with elastic demand and linear delivered pricing, the market equilibrium provides too much spatial differentiation.
In this article, we extend previous results on competitive delivered pricing by considering the second-best problem in which the social planner can regulate firm’s locations but not their pricing. Assuming constant marginal costs, we show that the constrained socially optimal locations are an equilibrium of the location-price game when: (i) demand is perfectly inelastic and (ii) demand is price sensitive but firms practice first-degree price discrimination. However, with elastic demand and linear delivered pricing, the market equilibrium provides too much spatial differentiation.
Document Type
Article
Language English
Editor(s) Elsevier
Language English
Editor(s) Elsevier
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