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To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.0307-3378.2007.00259.x Byline: Helge Sanner (*) Keywords: consumer welfare; spatial competition vs monopoly Abstract: ABSTRACT If we take into account the spatial dimension of markets, prices of incumbent firms may be higher and consumer surplus may be lower with competition than with monopoly. This result obtains unambiguously, even in the supposedly highly competitive case of Bertrand competition. Moreover, we are able to show that consumers of the commodity may be worse off with duopoly, if the distance between the firms' sites is sufficiently large. Author Affiliation: (*)Department of Economics and Social Sciences, University of Potsdam, Germany Article note: Correspondence: University of Potsdam, Department of Economics and Social Sciences, August-Bebel-Stra[sz]e 89, 14482 Potsdam, Germany. Tel: +49.331.977-4636; Email: sanner@rz.uni-potsdam.de

An analysis of the effects of price discrimination in two-dimensional markets reveals that each firm gains a monopolistic area in the center of the market that has the same shape as the entire market but with a distorted separating line depending on its extension. The study shows that firms that can apply price discrimination could not always make higher profits that firms that cannot apply the same techniques.

This study examines in which cases economic forces or historical singularities prevail in the determination of the spatial distribution of retail shops. We develop a model of location choice in discrete space. The main force towards an agglomerated structure is the reduction of transaction costs for consumers if retailers are located closely, whilst competition and transport costs work towards a disperse structure. We assess the importance of the initial conditions by simulating the resulting distribution of shops for identical economic parameters but varying initial settings. If the equilibrium distributions are similar we conclude that economic forces have prevailed, while dissimilarity indicates that ‘history’ is more important. The (dis)similarity of distributions of shops is calculated by means of a metric measure. [ABSTRACT FROM AUTHOR]

This study examines how the size of trade unions relative to the labor force impacts on the desirability of different organizational forms of self-financing unemployment insurance (UI). For this purpose, we compare the outcome of a model with a uniform payroll tax to a model where workers pay taxes according to their systematic risk of unemployment. Our results highlight the importance of the bargaining structure for the assessment of a particular UI scheme. Most importantly, it depends on the relative size of the unions whether efficiency favors a uniform or a differentiated UI scheme. [ABSTRACT FROM AUTHOR]