EconStor >
Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) >
Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW), Universität Erlangen-Nürnberg >
IWQW Discussion Paper Series, FAU Erlangen-Nürnberg >

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

http://hdl.handle.net/10419/29564
  
Title:Product variety, price elasticity of demand and fixed cost in spatial models PDF Logo
Authors:Gu, Yiquan
Wenzel, Tobias
Issue Date:2009
Series/Report no.:IWQW discussion paper series 03/2009
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
Document Type:Working Paper
Appears in Collections:IWQW Discussion Paper Series, FAU Erlangen-Nürnberg

Files in This Item:
File Description SizeFormat
61250283X.pdf229.92 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/29564

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