Article ID: | iaor20031278 |
Country: | Netherlands |
Volume: | 116 |
Issue: | 1 |
Start Page Number: | 129 |
End Page Number: | 152 |
Publication Date: | Oct 2002 |
Journal: | Annals of Operations Research |
Authors: | Dorta-Gonzlez Pablo, Santos-Peate Dolores-Rosa, Surez-Vega Rafael |
Keywords: | economics |
A spatial competition model involving decisions made by consumers and firms is proposed. A regulating agent assigns the demand, taking into account the price, transport and externality cost, and minimizing the joint consumer cost to obtain a Pareto optimal allocation. Assuming the Pareto optimal allocation, firms fix prices in order to maximize the profit. An equilibrium problem is studied and some results are presented. The problem and results are illustrated with an example.