Spatial Pricing, Optimal Location and Social Welfare with Consumer Arbitrage

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Title:	Spatial Pricing, Optimal Location and Social Welfare with Consumer Arbitrage
Authors:	麥朝成;Mai, Chao-cheng;Hwang, Hong;Lin, Yan-shu
Contributors:	淡江大學產業經濟學系
Date:	2007-09
Issue Date:	2011-09-29 10:51:13 (UTC+8)
Publisher:	Springer Berlin
Abstract:	This paper provides a comprehensive comparison of the optimal location, output and welfare of spatial discriminatory pricing by integrating consumer arbitrage into the Hwang and Mai (Am Econ Rev 80:567–575, 1990) model. It shows that the presence of arbitrage creates a significant influence on a firm’s locational choice and thus generates different welfare implications. When the discrepancy between the two markets is small, the optimal location and the resulting social welfare level under discriminatory pricing and mill pricing policies remain the same; however, when the discrepancy between the two markets is large, the two pricing policies yield different optimal locations which make the welfare under discriminatory pricing higher than that under mill pricing, hence reversing the support for anti-trust legislation.
Relation:	Annals of Regional Science 41(3), pp.619-638
DOI:	10.1007/s00168-007-0120-z
Appears in Collections:	[Graduate Institute & Department of Industrial Economics] Journal Article

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