Optimal Zoning in Spatial Differentiation
This study analyzes optimal zoning policy in a duopolistic spatial competition framework for both circular and linear spaces. A regulator is introduced in the third stage of the price-location game through a welfare function to model zoning preferences from firms and consumers. An equilibrium out...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Universidad de Chile
2017-04-01
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| Series: | Estudios de Economía |
| Online Access: | https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/45213 |
| Summary: | This study analyzes optimal zoning policy in a duopolistic spatial competition
framework for both circular and linear spaces. A regulator is introduced in
the third stage of the price-location game through a welfare function to model
zoning preferences from firms and consumers. An equilibrium outcome is then
found for both spatial configurations. When the regulator is inclined to favor
consumers (consumer-oriented) both firms are restricted to locate at one point
to serve the whole market. Nevertheless, when the preferences of the regulator
are biased towards firms (firm-oriented) the zoning area is maximized, with both
firms being located at the market boundaries. The equilibrium outcome confirms
location patterns found in real life situations under a non-neutral regulator. |
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| ISSN: | 0304-2758 0718-5286 |