ENDOGENOUS FIRM LOCATION WITH A DECREASING DENSITY OF CONSUMERS

JOHN HARTER

Abstract:

This note will use the Hotelling’s line model with a non-uniform distribution of consumers. Instead, a linear, decreasing density is employed to represent a decreasing population density as distance from a metropolitan area is increased along some transportation artery. Entry is sequential, and the number of firms is assumed endogenous after an initial firm is located, making the entrants consider the possibility of later firms. Entrants into this market have neither maximum nor minimum differentiation. Earlier entrants generally locate closer to the population center with the possible exception of the equilibrium location closest to the densest point on the line. The differentiation increases as the firms are farther from the population center.

Keywords:
Location Product differentiation Hotelling model

DOI: 10.52950/ES.2019.8.2.003

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APA citation:
JOHN HARTER (2019). Endogenous Firm Location with a Decreasing Density of Consumers. International Journal of Economic Sciences, Vol. VIII(2), pp. 35-44. , DOI: 10.52950/ES.2019.8.2.003

Data:
Received: 22 Sep 2019
Revised: 10 Nov 2019
Accepted: 6 Dec 2019
Published: 20 Dec 2019


Copyright © 2019, John Harter et al, John.Harter@eku.edu