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Location choices with a non‐linear demand function
Author(s) -
Colombo Stefano
Publication year - 2016
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12122
Subject(s) - function (biology) , economics , biology , evolutionary biology
This paper introduces a non‐linear hyperbolic demand function in a spatial shipping model. We show that, in contrast with the linear demand case, dispersion of firms emerges in equilibrium both when the firms compete through quantities and when they compete through prices. Further, the impact of the marginal production costs on the degree of firms' dispersion in equilibrium is positive when firms compete with prices, and it is inverse U ‐shape when firms compete with quantities.