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| Title: | | Product variety, price elasticity of demand and fixed cost in spatial models  |
| Authors: | | Gu, Yiquan Wenzel, Tobias |
| Issue Date: | | 2009 |
| Series/Report no.: | | Ruhr economic papers 92 |
| Abstract: | | This paper explores the implications of price-dependent demand in spatial models of product differentiation. We introduce consumers with a quasi-linear utility function in the framework of the Salop (1979) model. We show that the so-called excess entry theorem relies critically on the assumption of completely inelastic demand. Our model is able to produce excessive, insufficient, or optimal product variety. A proof for the existence and uniqueness of symmetric equilibrium when price elasticity of demand is increasing in price is also provided. |
| Subjects: | | Demand elasticity spatial models excess entry theorem |
| JEL: | | L11 L13 |
| ISBN: | | 978-3-86788-103-6 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des RWI Ruhr Economic Papers, RWI
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