Study of mixed duopolies with transportation costs at an arbitrary power
- Daniela Hernández Altamirano
, - Antonio Kido-Cruz,
- Ricardo Becerril Bárcenas
Abstract
In a mixed duopoly market with a private company and a public company, the literature has found that, under the consideration of a quadratic transportation cost function, the location of both companies can be represented as socially optimal. In the context of the Cremer model, the purpose of this paper is to analyze the behavior of the transportation cost function and benefit function when changing the exponent n of the transportation cost function, specifically when n ∈ [1,3]. Under this assumption it can be stated that both in n ∈ (1,2) and in n ∈ (2,3) the locations obtained are not only suboptimal, but also present a lack of equilibrium, since the private company shows a tendency of relocation with respect to the public company: it moves closer or further away according to the value of n.
JEL Codes: L13, R32, R38, D43
Received: 01/02/2024. Accepted: 21/07/2024. Published: 20/02/2025.
Keywords
Mixed duopoly, socially optimal locations, Hotelling's law, location price model, transportation cost
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