New Horizons in Regional Science series
Edited by Aura Reggiani and Peter Nijkamp
Chapter 16: Imperfect Competition and Congestion in a City with Asymmetric Subcentres
André de Palma, Fay Dunkerley and Stef Proost 16.1 INTRODUCTION Congestion on a Friday night or Saturday morning on your way to the shopping mall is a well-known problem. Surprisingly, it has not been on the research agenda for many economists. Fujita and Thisse (2002) looked into the economics of shopping malls. Shopping malls reduce search costs for the customers but also reduce the profitability of the firms located in the subcentre if they offer products that are easily substitutable. This explains the presence of very different shops in one shopping mall. We are interested in the competition between shopping malls and in the effects of congestion on their profitability and ultimately on the number of shopping malls. In fact, we are interested in subcentres that may be shopping malls or sell any other product. What is important is that the product they offer is diversified and that customers are all located in a centre and can choose what subcentre to go to for their shopping. There will be different roads to each of the subcentres so that we can study the role of congestion on the competition between subcentres and on the number of subcentres. De Palma and Proost (2004) developed a monopolistic competition model for a city with subcentres where the city inhabitants can shop and work in the subcentres. They focused on symmetric Nash equilibria and looked into the existence and properties of these equilibria. The real world is very often nonsymmetric, and this chapter studies non-symmetric...
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