A NOTE ON BILATERAL MONOPOLY AND THE OPTIMUM LOCATION OF VERTICALLY RELATED FIRMS*

This note considers Blair, Kaserman, and Romano's conclusion (1989) that the only optimal solution in the case of bilateral monopoly is the joint profit maximization solution and examines the pattern of industrial location under joint profit maximization.     

OPTIMUM LOCATION OF PUBLIC FACILITIES UNDER THE INFLUENCE OF THE LAND MARKET*

ABSTRACT. This paper discusses the problem of the optimal location of public facility(ies) in a long narrow city, especially taking into consideration the externality-internalizing effect of the land market. It shows a systematic approach to dealing with the land market mechanism in first a one-facility and then a two-facility case. The analysis assures the importance of posing the location-optimizing problem even under the influence of the land market.     

OPTIMUM LOCATION AND THEORY OF THE FIRM UNDER A REGULATORY CONSTRAINT*

This paper attempts to incorporate space in the theory of a regulated firm. It will show that the A-J effects are not affected in a spatial setting. In addition, it will also demonstrate that as the difference between the regulated fair rate of return and the unconstrained profit-maximizing rate of return on capital becomes greater, the optimum location of the regulated firm moves towards the site of the product market, if capital and labor are complements (substitutes) and if marginal transportation costs (with respect to distance) are an increasing (decreasing) function of labor usage.     

THE LOCATION THEORY OF THE PLANTATION*

ABSTRACT This paper develops a method for studying noninfinitesimal operational units, with the Thünen location and land use model. With constant returns to scale and perfect divisibility of nonland inputs, all operational units would occupy only a point on the landscape. The present model uses increasing returns to scale to generate large operational units, called “plantations” and studies the comparative statics. The setting of the model is an agricultural operation in which some processing of raw crop must be conducted prior to shipment to market. The processing is assumed to have increasing returns to scale.     

SPATIAL EQUILIBRIUM WITH FOOTLOOSE FIRMS*

ABSTRACT. We determine the location equilibria in a duopoly model under a novel solution concept. Typically, spatial equilibrium is described as either a simultaneous price and location game, or else as a two-stage location-then-price game. We introduce a new alternative, a two-stage price-then-location game. It is well known that no (pure strategy) equilibrium usually exists under the two standard solution concepts when products are homogeneous. We show this is also true for the new concept. We then provide numerical results for a specific functional form (the logit model) which introduces product heterogeneity into the standard framework, restoring equilibrium when the degree of substitutability between products is not too small.     

A MANAGERIAL MODEL OF THE EFFECT OF PRODUCT MARKET STRUCTURE ON FIRM LOCATION*

ABSTRACT. This paper develops a model of firm location choice based on managerial theory of discretionary behavior. Specifically, it is assumed that the management of the firm maximizes a utility function which incorporates profits and location-specific amenities. As the firm moves from one prospective location to another, it faces a profit-amenity constraint imposed by market conditions. The optimal location decision is derived by maximizing the utility function subject to this market-imposed constraint. After examining the properties of the optimal solution, the impact of various changes in product market structure (including changes from a contestible markets perspective) on the location decision is investigated. A major finding is that the impact of a change in market structure depends upon the nature of the structure change and upon the substitution and income effects induced by the structural change.     

LOCATION OF PUBLIC FACILITIES WITH SPILLOVER EFFECTS: VARIABLE LOCATION AND PARAMETRIC SCALE*

ABSTRACT This paper studies the location of public facilities of two neighboring local governments which consider not only the influence of the land market but also the spillover effects that each jurisdiction may have on the other. We obtain the following results: (1) in most cases, one of the cities behaves as an isolated city in choosing the facility location while the other enjoys the spillover effect as a free rider; (2) we also find that the equilibrium location in the two noncooperative city case is not socially optimal except for a special case.     

THE MOSES-PREDOHL PULL AND THE LOCATION DECISION OF THE FIRM*

ABSTRACT This paper exploits the two-stage approach and the envelope theorem to examine the role of the Moses-Predhol pull in the cost-minimizing location theory of the firm. It shows that the two-stage approach introduces the Moses-Predohl pull into the first-order conditions. The Moses-Predohl pull is shown to be equal to zero through the envelope theorem. These results show why the assertions of Bossert and Buhl (1986) concerning Kusumoto (1984,1985) are incorrect.     

THE MINIMAX-MIN LOCATION PROBLEM*

We consider a new objective function for the placement of a public facility with reference to variations in accessibility : the minimization of the range between the maximal and the minimal distances to users. Some properties of the solution are given; algorithms for the Euclidean and rectilinear distance cases are presented.     

PRODUCTION TECHNOLOGY UNCERTAINTY AND THE OPTIMAL LOCATION OF THE FIRM*

ABSTRACT This paper investigates the implication of production-technology uncertainty for the exclusion theorem. The paper presents the result that the risk-averse firm facing production technology uncertainty prefers an intermediate location to avoid risk under certain conditions. The firm chooses an intermediate location (over a corner location) particularly if its degree of risk aversion overwhelms the inherent convexity of profit with respect to location. The latter depends, in turn, on the structure of production technology characterized by the elasticity of substitution and returns to scale parameters.