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SPATIAL PRICE COMPETITION WITH CONSUIMERS ON A PLANE, AT INTERSECTIONS, AND ALONG MAIN ROADWAYS *
Author(s) -
Braid Ralph M.
Publication year - 1993
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1993.tb00220.x
Subject(s) - competition (biology) , intersection (aeronautics) , nash equilibrium , point (geometry) , mill , economics , reservation price , tonne , bertrand competition , limit price , plane (geometry) , mile , microeconomics , econometrics , mathematics , price level , geometry , geology , geography , monetary economics , oligopoly , geodesy , ecology , archaeology , cournot competition , biology , cartography
. This paper examines two‐dimensional price competition on a plane, with a block metric and a square grid of main roadways. One store is located at each intersection of main roadways. Consumer locations include a uniform distribution over the plane, linear concentrations along main roadways, and point concentrations at intersections. Bertrmd‐Nash mill price competition is examined first. The equilibrium price depends on the relative numbers of consumers in the three types of locations (and on travel costs per mile and the spacing between stores). If too many consumers are in each point concentration, then the price equilibrium is undermined by a high‐price strategy or by mill‐price undercutting. Spatial competition with price discrimination is examined next, and compared to Bertrand‐Nash mill price competition.