TY - JOUR
T1 - Why should a firm choose to limit the size of its market area?
AU - Alderighi, Marco
AU - Piga, Claudio A.
PY - 2008/3/1
Y1 - 2008/3/1
N2 - We study when a monopolistically-competitive firm may optimally choose to limit the size of its market. This may be the case when the cost of serving the market with geographically dispersed customers is increasing in size. We also investigate the incentives faced by a firm to limit the reach of its market when it adopts two different pricing schemes. We show that under certain assumptions the derived equilibria are constrained socially optimal.
AB - We study when a monopolistically-competitive firm may optimally choose to limit the size of its market. This may be the case when the cost of serving the market with geographically dispersed customers is increasing in size. We also investigate the incentives faced by a firm to limit the reach of its market when it adopts two different pricing schemes. We show that under certain assumptions the derived equilibria are constrained socially optimal.
KW - Endogenous fixed costs
KW - Monopolistic competition
KW - Overlapping market areas
KW - Transport costs
UR - http://www.scopus.com/inward/record.url?scp=42649092532&partnerID=8YFLogxK
U2 - 10.1016/j.regsciurbeco.2008.01.002
DO - 10.1016/j.regsciurbeco.2008.01.002
M3 - Article
AN - SCOPUS:42649092532
VL - 38
SP - 191
EP - 201
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
SN - 0166-0462
IS - 2
ER -