The Geography of Competition: Firms, Prices, and Localization / Edition 1

by John R. Miron

Overview

This book provides a comprehensive, up-to-date, and expert synthesis of location theory. What are the impacts of a firm’s geographic location on the locations of customers, suppliers, and competitors in a market economy? How, when, and why does this result in the clustering of firms in space? When and how is society made better or worse off as a result? This book uses dozens of locational models to address aspects of these three questions. Classical location problems considered include Greenhut-Manne, Hitchcock-Koopmans, and Weber-Launhardt. The book reinterprets competitive location theory, focusing on the linkages between Walrasian price equilibrium and the localization of firms. It also demonstrates that competitive location theory offers diverse ideas about the nature of market equilibrium in geographic space and its implications for a broad range of public policies, including free trade, industrial policy, regional development, and investment in infrastructure. With an extensive bibliography and fresh, interdisciplinary approach, the book will be an invaluable reference for academics and researchers with an interest in regional science, economic geography, and urban planning, as well as policy advisors, urban planners, and consultants.

Product Details

ISBN-13:	9781441956255
Publisher:	Springer New York
Publication date:	03/22/2010
Edition description:	2010
Pages:	456
Product dimensions:	6.40(w) x 9.30(h) x 1.30(d)

Table of Contents

1 The Craft of the Story Teller 1

1.1 Introduction 1

1.2 Geographic and Other Perspectives on Localization 3

1.3 Marshall's Perspective as a Starting Point 8

1.4 The Development of Economics Since Marshall 10

1.5 Why Is Competitive Location Theory Problematic? 18

1.6 Location Theory and Geography 20

1.7 My Approach 22

1.8 What This Book Is About 24

1.9 What This Book Is Not About 26

2 The Firm at Home and Abroad 29

2.1 The Greenhut–Manne Problem 29

2.2 Model 2A: Non-spatial Monopolist 30

2.3 Model 2B: Monopolist Selling at Two Places; Factory at Place 1 Only 43

2.4 One Market or Two? 50

2.5 Pricing Strategies 52

2.6 Model 2C: Factory at Each Place 53

2.7 Model 2D: Choice of Sites and Localization 55

2.8 Two Markets Identical 57

2.9 Differing Markets 59

2.10 Comparative Statics in Model 2D 61

2.11 Risk Aversion and Multiple Plants 62

2.12 Model 2E: Contestability and Preemption of Competitors 62

2.13 Final Comments 65

3 Logistics and Programming 69

3.1 The Hitchcock–Koopmans Problem 69

3.2 An Illustrative Example 75

3.3 Model 3A: Non-spatial Version of the Model 76

3.4 The Example in a Non-spatial Version 78

3.5 Model 3B: Spatial Version of the Model 81

3.6 The Example: A Spatial Version 87

3.7 What Is a Market? 92

3.8 Final Comments 93

4 The Struggling Masses 97

4.1 The Cournot–Samuelson–Enke Problem 97

4.2 Model 4A: Autarky 100

4.3 Model 4B: Integrated Market Solution: Zero Shipping Cost 107

4.4 Model 4C: Spatial Price Equilibrium with Shipping Costs 113

4.5 Final Comments 122

5 Arbitrage in the Grand Scheme 125

5.1 The Samuelson–Takayama–Judge Problem 125

5.2 Model 5A 128

5.3 Social Welfare at Place i 132

5.4 Net Social Payoff and Global Net Social Welfare 134

5.5 A Special Case: Horizontal Supply Curve at Each Place 137

5.6 Three Examples of Multiregional Shipment 138

5.7 Application 142

5.8 Case Study 144

5.9 Final Comments 147

6 Ferrying Inputs and Outputs 151

6.1 The Weber–Launhardt Problem 151

6.2 Model 6A: I = 2 Input Places, J = 1 Output Place: Location on a Line 155

6.3 Model 6B: I = 2 Input Places, J = I Output Place: Location on a Two-Dimensional Plane 159

6.4 Model 6C: Substitutability, Scale, and Location 165

6.5 Model 6D: Price Elasticity 170

6.6 Model 6E: More Than 2 Input Places and/or More Than 1 Output Place 171

6.7 Model 6F: Location on a Transportation Network 172

6.8 Final Comments 175

7 What the Firm Does On-Site 177

7.1 The Marshall–Lentnek–MacPherson–Phillips Problem 177

7.2 Inventory Models in Management 181

7.3 Model 7A: The Firm Doing Repairs In-House 183

7.4 Model 7B: Outsourced Repairs 188

7.5 Model 7C: The Decision to Outsource 191

7.6 Model 7D: The Advantage of Agglomeration 193

7.7 How Far Away Can the Contractor Be? 197

7.8 Final Comments 197

8 Staking Out the Firm's Market 201

8.1 The Market Area Problem 201

8.2 Range and Geographic Size of Market 205

8.3 Trade Area and Market Area in Retailing 211

8.4 Model 8A: Two Firms Selling Commodity at Same f.o.b. Price 212

8.5 Model 8B: Market Area Boundary Between Two Firms Selling Same Commodity at Different f.o.b. Prices 215

8.6 Model 8C: Why Do Prices Differ Among Firms? 217

8.7 Model 8D: Market Area Boundary Between Two Firms with Different Capacities 220

8.8 Model 8E: Market Area Boundary Between Two Firms with Different, but Perfectly Substitutable, Commodities 221

8.9 Model 8F: Market Area Boundary Between Two Firms with Different, but Perfectly Substitutable, Commodities When Customers Are of Two Types 222

8.10 Model 8G: Market Area Boundary Between Two Firms Supplying Different Commodities 223

8.11 Model 8H: Destination Choice Under Uncertainty 226

8.12 Final Comments 227

9 The Cautious Farmer and the Local Market 231

9.1 The Economides–Siow Problem 231

9.2 The Barter Market 233

9.3 Uncertainty and Rationality 236

9.4 Model 9A: Non-spatial Market 240

9.5 Model 9B: Cooperation in a Spatial Market 249

9.6 Model 9C: Competition for Land in a Spatial Market 259

9.7 Final Comments 264

10 Farming for Cash 267

10.1 The Thünen–Lee–Averous Problem 267

10.2 Model 10A: Farms Producing Wheat Along a Line 273

10.3 Model 10B: Farms Producing Wheat on a Rectangular Plane 279

10.4 Model 10C: Farms Producing Two Independently Demanded Crops Along a Line! 285

10.5 Model 10D: Farms Producing Two Independently Demanded Crops on a Rectangular Plane 293

10.6 Final Comments 295

11 The City and Its Hinterland 299

11.1 The Thünen–Beckmann–Samuelson Problem 299

11.2 Model 11A: Factor Substitution with One Crop and in the Absence of Shipping Cost 302

11.3 Model 11B: Factor Substitution with One Crop and in Presence of Shipping Cost 306

11.4 Model 11C: Factor Substitution with Two Crops in Presence of Shipping Costs 312

11.5 Model 11D: Non-spatial Version of Samuelson's Model of a Thünen Economy 318

11.6 Model 11E: Spatial Version of Samuelson Model 323

11.7 Final Comments 331

12 Local Production and Consumption 335

12.1 The Thünen–Miron Problem 335

12.2 Local Production in the Farm Economy 337

12.3 Model 12A: Farm in Autarky 339

12.4 Model 12B: Farm Purchasing Soap from the Factory 344

12.5 Comments on Model 12B 355

12.6 The Soap Factory as Profit Maximizer 356

12.7 Model 12C: The Factory as Monopolist Using f.o.b. Pricing 358

12.8 Model 12C: The Factory Using Discriminatory Pricing 362

12.9 Model 12D: The Factory as Bilateral Monopolist 366

12.10 Final Comments About This Chapter 373

12.11 The Connecting Topics 378

Appendix A Assumptions and Rationale for Localization 385

Appendix B Glossary 393

Bibliography 411

First Author Index 445

Subject Index 451

Editorial Reviews

From the reviews:

“The author has crafted a carefully written textbook which I recommend both to students in competitive location theory … and to practitioners with an interest in the discipline. One of the book’s nicest aspects is its detailed discussion of the assumptions at the basis of each model. This gives the author the chance to assess the usefulness and limits of each approach, and to relate the entire set of models in terms of questions that can (or cannot) be answered in that specific framework.” (Gaetano Alfredo Minerva, Scienze Regionali, Vol. 11 (2), 2012)

“The geography of competition: Firms, prices, and localization … is a well-crafted, clearly written book that fully completes the agenda it lays out from the outset. It provides an exhaustive, in-depth and excellent study of one of the most important fields in spatial economics. … It is constructed and written in a clear manner. … It is an invaluable reference for researchers as well as students who are concerned with economic geography, regional science, urban economics, location theory, civil engineering, transportation, and urban planning.” (Wei-Bin Zhang, Papers in Regional Science, Vol. 91 (1), March, 2012)

From the Publisher