By Nijkamp P. (ed.)
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Extra resources for Handbook of Regional and Urban Economics, Vol. 1: Regional Economics, Edition: Third Edition
2: The Location of Production Activities the same point or sufficiently far apart. ) In contrast, when firms are close but separated, mill price competition results in indefinitely fluctuating prices. ) This invalidates Hotelling's (1929) belief that spatial differentiation yields stability. Notice also that existence is not restored simply by eliminating discontinuities in the demand functions. Jaskold Gabszewicz and Thisse (1986) have provided an example which has continuous demands but does not possess a price equilibrium.
E. 11) [see Beckmann and Marschak (1955)]. The linear programming approach to location theory is readily extended to several commodities, and to production from resources and labor with input coefficients and explicit recognition of constraints imposed by local resource availabilities [see Beckmann and Marschak (1955), Isard (1958), Stevens (1958)]. Moreover, transportation may itself be modelled as a service produced from resources and labor [see Beckmann and Marschak (1955)]. g. Samuelson (1952), Takayama and Judge (1971), Mougeot (1975)].
J. Beckmann andJ. -F. Thisse one deals with transportation cost functions exhibiting scale economies relative to distance. Indeed, it is sometimes argued that observed transportation rates are not constant. g. Hoover (1948) and Isard (1956)]. In such cases, transportation costs between two points should preferably be modelled by functions increasing and (strictly) concave in distance. Levy (1967) has shown that the Hakimi theorem remains valid for such functions. Furthermore, as the degree of increasing returns augments, marginal transportation costs become less and less sensitive to distance.