EconStor >
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Essen >
Ruhr Economic Papers, RWI >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/26798
  
Title:A note on the excess entry theorem in spatial models with elastic demand PDF Logo
Authors:Gu, Yiquan
Wenzel, Tobias
Issue Date:2007
Series/Report no.:Ruhr economic papers 33
Abstract:This paper revisits the excess entry theorem in spatial models à la Vickrey (1964) and Salop (1979) while relaxing the assumption of inelastic demand. Using a demand function with a constant demand elasticity, we show that the number of firms that enter a market decreases with the degree of demand elasticity.We find that the excess entry theorem does only hold when demand is sufficiently inelastic. Otherwise, there is insufficient entry. In the limiting case of unit elastic demand, the market is monopolized. We point out when and how a public policy can be desirable and broaden our results with a more general transportation cost function.
Subjects:Elastic demand
spatial models
excess entry theorem
JEL:L11
L13
ISBN:978-3-86788-030-5
Document Type:Working Paper
Appears in Collections:Ruhr Economic Papers, RWI
Publikationen von Forscherinnen und Forschern des RWI

Files in This Item:
File Description SizeFormat
556627482.PDF174.64 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/26798

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.