Spatial competition and equilibrium in a circular market

The paper presents an analysis of spatial competition between two firms in a circular market. It is shown that the existence problem of a Bertrand-Nash- Equilibrium exists for the circular market in the same way as for the linear and bounded market. This is demonstrated by directly studying the reaction functions of the competing producers and without referring to merely technical fixed point arguments. The existence problem is solved by adding a move structure to the game, regarding market entry as sequential and taking place in historical time.

Provision of public goods, voting and agglomerative bias

Skill-biased technical change is identified as the driving force behind the changing skill composition in OECD countries rather than structural change. The finding is partly the result of the sectoral view taken. This paper suggests a different view which uses the production process as a starting point. The economy is divided into physica production, personal services, and intermediate services; these branches are again subdivided. Applying the resulting grid to German data from the Socio-economic Panel shows that a structural change in the production process is driving the skill composition of the German labor force.

Aggregate Productivity Effects of Road Investment - A Reassessment for Western Europe

The paper investigates the productivity effects of national road infrastructure investment in Western Europe.The study makes use of newly available OECD/ECMT data showing a secular decline of productivity growth and of transport infrastructure investment. Infrastructure availability is modelled like an unpaid shadow factor allowing for more than constant aggregate returns to scale while firms operate with linear homogenous production functions, with transport as an input. Productivity increases are measured by the Toernquist index The link between road investment and macroeconomic productivity is studied using a new econometric technique to avoid the identification problem that discredited the early literature. The results show that there is no clear over- or underinvestment. The aggregate level of road investment seems to be such that the implied rate of return is close to the opportunity cost of private capital.

The effects of trade liberalization with spatial markets

It is established that with the reduction of trade barriers the number of competitors on the spatial markets involved increases. This increase has short run consequences for price competition. If the trade liberalisation is anticipated by the domestic producers they will respond by changing the locational pattern as well. A unique locational equilibrium is established from the no further entry condition of the process of sequential location of exporters' outlets in the import markets. The entry process stops if no further entrant can locate between the last entrant and any of the suppliers having entered the market before without being undercut in the price game.

Fairness, efficiency and the simultaneity of pricing and infrastructure capacity choice

The primary objective of infrastructure pricing in normative economics and policy discussions is economic efficiency This focus has led to the proposal that charges for infrastructure use should be based on all internal and external marginal costs associated with the use of infrastructure services. Distributional considerations, of the “fairness” of infrastructure pricing often played a supplementary role to help the acceptance of infrastructure charging. This paper sets out a simple framework for a quasi-market for infrastructure services with the perspective of simultaneously determining efficient prices and levels of infrastructure investment. It is shown that, depending on the intensity of infrastructure use, revenues generated by efficient prices do not in all cases cover the full costs of the services. Efficient cost recovery requires an additional fixed charge. Such a combination of a fixed charge and an efficient price per unit of service implies a distributional conflict if users differ substantially in their demand for infrastructure services. It is shown that methods to allocate fixed costs resolve this conflict applying standard norms of distributional justice and being compatible with a bargaining equilibrium among heterogeneous infrastructure users

Evaluation of CO2 injection processes in geological formations for site screening

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