Spatial competition and flexible manufacturing with spatially discriminatory pricing

Kuang Cheng Andy Wang, Hong Ren Din, Wen Jung Liang*

*Corresponding author for this work

Research output: Contribution to journalJournal Article peer-review

1 Scopus citations

Abstract

This paper develops a two-dimensional spatial framework, in which firms have the technique of flexible manufacturing and engage in spatially discriminatory pricing, in order to explore the firms’ optimal locations and optimal attributes of basic products under linear transportation costs. The paper shows that the two firms will agglomerate at the center of the location line and the optimal attributes of the two basic products will be located at the first and third quartiles of the attribute line, respectively, when the ratio of the marginal modification rate to the transport rate is high. It also shows that the two firms will locate separately on the location line and that the optimal attributes of the two basic products will remain at the first and third quartiles, when this ratio is moderate. Moreover, this paper proves that the two firms will locate at the first and third quartiles of the location line, respectively, and that the attributes of the basic products will agglomerate at the center of the attribute line, when this ratio is low.

Original languageEnglish
Pages (from-to)295-314
Number of pages20
JournalAnnals of Regional Science
Volume53
Issue number1
DOIs
StatePublished - 01 08 2014

Bibliographical note

Publisher Copyright:
© 2014, Springer-Verlag Berlin Heidelberg.

Keywords

  • L22
  • R32

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