Simple Centrifugal Incentives in Spatial Competition

This paper studies the effects of introducing centrifugal incentives in an otherwise standard Downsian model of electoral competition. First, we demonstrate that a symmetric equilibrium is guaranteed to exist when centrifugal incentives are induced by any kind of partial voter participation (such as abstention due to indifference, abstention due to alienation, etc.) and, then, we argue that: a) this symmetric equilibrium is in pure strategies, and it is hence convergent, only when centrifugal incentives are sufficiently weak on both sides; b) when centrifugal incentives are strong on both sides (when, for example, a lot of voters abstain when they are sufficiently indifferent between the two candidates) players use mixed strategies - the stronger the centrifugal incentives, the larger the probability weight that players assign to locations near the extremes; and c) when centrifugal incentives are strong on one side only - say for example only on the right - the support of players'mixed strategies contain all policies except from those that are sufficiently close to the left extreme

Biodiversity and Geography

The paper combines an economic-geography model of agglomeration and periphery with a model of species diversity and looks at optimal policies of biodiversity conservation. The subject of the paper is "natural" biodiversity, which is inevitably impaired by anthropogenic impact. Thus, the economic and the ecological system compete for space and the question arises as to how this conflict should be resolved. The decisive parameters of the model are related to biological diversity (endemism vs. redundancy of species) and the patterns of economic geography (centrifugal and centripetal forces). As regards the choice of environmental-policy instruments, it is shown that Pigouvian taxes do not always establish the optimal allocation.biodiversity, new economic geography, agglomeration, species redundancy vs. endemism, environmental regulation

Biodiversity and Geography

The paper combines an economic-geography model of agglomeration and periphery with a model of species diversity and looks at optimal policies of biodiversity conservation. The subject of the paper is "natural" biodiversity, which is inevitably impaired by anthropogenic impact. Thus, the economic and the ecological system compete for space and the question arises as to how this conflict should be resolved. The decisive parameters of the model are related to biological diversity (endemism vs. redundancy of species) and the patterns of economic geography (centrifugal and centripetal forces). As regards the choice of environmental-policy instruments, it is shown that Pigouvian taxes do not always establish the optimal allocation.biodiversity, new economic geography, agglomeration, species redundancy vs. endemism, environmental regulation

Concentration, Separation, and Dispersion: Economic Geography and the Environment

The paper investigates the spatial patterns of industrial location and environmental pollution in a new-economic-geography model. Factors of production and their owners are mobile, but factor owners are not required to live in the region in which their factors are employed. Under laisser-faire, a chase-and-flee cycle of location is possible: people, who prefer a clean environment, are chased by polluting industries, which want to locate geographically close to the market. Locational patterns under optimal environmental regulation include concentration, separation, dispersion and several intermediate patterns. Moreover, it is shown that marginal changes in environmental policy may induce discrete changes in locational patterns.economic geography, migration, trade, pollution, environmental regulation

Bilateral monopolies and location choice

We analyse how equilibrium locations in location-price games à la Hotelling are affected when firms acquire inputs through bilateral monopoly relations with suppliers. Assuming a duopoly downstream market, we consider the case of two independent input suppliers bargaining with both downstream firms. We find that the presence of input suppliers changes the locational incentives of downstream firms in several ways, compared with the case of exogenous production costs. Bargaining induces downstream firms to locate further apart, despite the fact that input prices increase with the distance between the firms. In the case of asymmetrical bargaining strengths, the downstream firm facing the stronger input supplier has a strategic advantage and locates closer to the market centre. Sequential location introduces a first-mover advantage which may be mitigated or reinforced, depending on whether or not it is the first mover that bargains with the stronger input supplier.Spatial competition; Location choice; Bilateral monopolies; Endogenous production costs.

Paul Krugman and the New Economic Geography - assesment in the light of the dynamics of a “real world” local system of firms

Since the publication of Krugman's paper on "Geography and Trade" in 1991, a burgeoning literature has developed under the heading New Economic Geography. In the following we shall survey the NEG literature and critically evaluate its contribution relative to earlier work on similar topics. More specifically, we will focus our attention on a model that seems to have given new impulses to the introduction of spatial factors into the economic analysis: Krugman’s model. We will proceed with our assesment analysing if and to which extent the features of the model are effective in investigating a real local system of firms: the Etna Valley, an industrial agglomeration specialized in the production of microelectronic components in the area around the Sicilian town of Catania. What emerges from the critical analysis is that the above model results to be extremely simplified. If, on one hand this may be true for every economic model, on the other, we feel that, in our specific case study, the formalization of the processes of local development does not result to be entirely useful. Indeed, great part of the analysis of the industrial district based on the “industrial atmosphere” (Marshall, 1890) remains out of the picture. Therefore, we find more useful the positions of those authors that not drawing on the deductive methods of theorising and analysing employed by Krugman, nonetheless have managed to enlighten mechanisms that seem to be more apt to investigate dynamics taking place in developing areas. More specifically, they seem to offer more useful insights in the context of non stationary economies where markets are not yet stabilized and therefore are not entirely capable of adequately transmitting incentives and information to the actors in the economy.

Quality and location choices under price regulation

In a model of spatial competition, we analyse the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator and find that this (second-best) price causes over-investment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the cost of investing in product quality, or the transportation cost of consumers, is sufficiently high. By comparing the case of price competition, we also identify a hitherto unnoticed benefit of regulation, namely improved locational efficiency. -- In einem räumlichen Wettbewerbsmodell untersuchen wir die Gleichgewichte, die sich bei exogen gegebenem Preis einstellen. In einem erweiterten Hotelling Modell unterstellen wir, dass die Firmen den Standort (Produktdifferenzierung) und die Qualität ihres Produktes wählen. Wir ermitteln den, aus der Sicht eines sozialen Planers, optimalen Preis. Es zeigt sich, dass dieser (zweitbeste) Preis im Vergleich zum effizienten Ergebnis zu einer Überinvestition in Qualität und zu einer unzureichenden Produktdifferenzierung führt, wenn die Qualitätskosten der Firmen oder die Transportkosten der Konsumenten hinreichend groß sind. Ein Vergleich mit dem Marktergebnis bei Preiswettbewerb offenbart einen bisher unbeachteten positiven Effekt der Preisregulierung, den verbesserten Grad der Produktdifferenzierung.Spatial competition,product quality,location,price regulation

Quality and location choices under price regulation

In a model of spatial competition, we analyse the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator and find that this (second-best) price causes over-investment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the cost of investing in product quality, or the transportation cost of consumers, is sufficiently high. Comparing with the case of price competition, we also identify a hitherto unnoticed benefit of regulation, namely improved locational efficiency.Spatial competition; Product quality; Location; Price regulation.