Spatial competition with free entry, Chamberlinian tangencies, and social efficiency

Free entry in Löschian spatial competition leads to a tangency between each firm's negatively sloped average revenue and the downsloping portion of average costs—as in Chamberlin's monopolistic competition. It is generally concluded that this equilibrium involves too many inefficiently small firms. However, this conclusion is incorrect. The difference between price and firm marginal production costs in spatial equilibrium is just sufficient to cover the additional marginal cost of output resulting from availability of multiple locations. This Chamberlinian tangency does not imply inefficiency, because it does not include all the social costs and benefits resulting from spatial competition.     

Self-organizing marketplaces

Dynamics of retail firms in marketplaces are analyzed, assuming that firms compete under monopolistic competition within a marketplace as well as between marketplaces and consumers are uniformly distributed over space. The number, size, and location of marketplaces or edge cities are analytically obtained. Furthermore, extending the model to a two-dimensional space, Christaller–Lösch system of hexagonal market areas is analytically derived.     

Product choice with economies of scope

This paper develops a model in which two competing firms on a bounded line each sell two products. Production costs for each firm are lower the closer are its two products. It is shown that there may be anywhere from zero to three possible equilibrium configurations. Equilibrium may entail market segmentation, market interlacing or an intermediate case. The paper contributes to two bodies of literature: (i) Industrial organization. When the line is interpreted as a one-dimensional characteristic space, the model provides an appealing explanation of economies of scope in multi-product firms. (ii) Firm location theory. The model relaxes the unrealistic assumption made in spatial models that each firm has a single outlet and obtains significantly different results.     

Energy balance climate models and general equilibrium optimal mitigation policies

In a general equilibrium model of the world economy, we develop a two-dimensional energy balance climate model featuring heat diffusion and anthropogenic forcing driven by global fossil fuel use across the sphere of the Earth. This introduces an endogenous location dependent temperature function, driving spatial characteristics, in terms of location dependent damages resulting from local temperature anomalies into the standard climate-economy framework. We solve the social planner's problem and characterize the competitive equilibrium for two polar cases differentiated by the degree of market integration. We define optimal taxes on fossil fuel use and how they may implement the planning solution. Our results suggest that if the implementation of international transfers across latitudes is not possible then optimal taxes are in general spatially non-homogeneous and may be lower at poorer latitudes. The degree of spatial differentiation of optimal taxes depends on heat transportation. By employing the properties of the spatial model, we show by numerical simulations how the impact of thermal transport across latitudes on welfare can be studied.     

Land use dynamics and the environment

This paper builds a benchmark framework to study optimal land use, encompassing land use activities and environmental degradation. We focus on the spatial externalities of land use as drivers of spatial patterns: land is immobile by nature, but local actions affect the whole space since pollution flows across locations resulting in both local and global damages. We prove that the decision maker problem has a solution, and characterize the corresponding social optimum trajectories by means of the Pontryagin conditions. We also show that the existence and uniqueness of time-invariant solutions are not in general guaranteed. Finally, a global dynamic algorithm is proposed in order to illustrate the spatial-dynamic richness of the model. We find that our simple set-up already reproduces a great variety of spatial patterns related to the interaction between land use activities and the environment. In particular, abatement technology turns out to play a central role as pollution stabilizer, allowing the economy to reach a time-invariant equilibrium that can be spatially heterogeneous.     

Precise computation of a competitive equilibrium of the discrete land market model

This paper provides a finite algorithm to compute a competitive equilibrium of the Alonso-type discrete land market model (known as bid-rent equilibrium) without assuming any condition on the spatial configuration such as monocentricity. The existence of the finite algorithm implies that the discrete land market model is sufficiently tractable for computer simulation analysis (sensitivity analysis) even if the spatial configuration is variable. Specifically, we can evaluate numerically the effects of new routes in a transportation network upon equilibrium rents and commuting mode.     

Minimaximin results with applications to economic equilibrium

Abstract theorems are proved that can be used to establish the existence of a free disposal equilibrium in some infinite dimensional models of the economy. The results generalize those previously proved in that they apply to concave–convex functions rather than bilinear functions and excess demand correspondence dedicated to Professor Heinz König rather than excess demand functions.     

The influence of natural hazards on urban housing location

The effects of natural hazards on urban housing location are investigated, using as an example seismic damage. The seismic damage function is allowed to arbitrarily vary in two-dimensional (r, θ) space rather than the usual one-dimensional models of Mills, Muth, Alonso, etc. Damage is assumed to only affect capital inputs (i.e., the structure), not land. Under the influence of expected damage, the population and CBD (treated as a point) are seen to shift toward lower expected damage. It is found that the relative importance of damage increases as the capital productivity parameter (b) of the Cobb-Douglas production function increases.     

How to share when context matters: The Möbius value as a generalized solution for cooperative games

All quasivalues rest on a set of three basic axioms (efficiency, null player, and additivity), which are augmented with positivity for random order values, and with positivity and partnership for weighted values. We introduce the concept of Möbius value associated with a sharing system and show that this value is characterized by the above three axioms. We then establish that (i) a Möbius value is a random order value if and only if the sharing system is stochastically rationalizable and (ii) a Möbius value is a weighted value if and only if the sharing system satisfies the Luce choice axiom.     

The complementarity of IT and HRM capabilities for competitive performance: a configurational analysis of manufacturing and industrial service SMEs

ABSTRACT

Building on the resource-based view (RBV) perspective, we analyse the combined effects of two highly-valued organizational resources, namely information technology (IT) capabilities and human resource management (HRM) capabilities, on the competitive performance of small and medium-sized enterprises (SMEs). Three resource configurations are derived from data on 227 SMEs (121 from the manufacturing sector and 106 from the industrial services sector) through a cluster analysis. These resource configurations are labelled IT Capabilities-dominant Configuration (ITC), e-Business Capabilities-dominant Configuration (e-BC), and HRM Capabilities-dominant Configuration (HRC). This last configuration is the best-performing, followed by the e-BC, with the ITC as the worst-performing. The results also show that manufacturing and service firms are very unevenly distributed within HRC and ITC configurations, suggesting notable differences between the two sectors regarding their respective IT and non-IT capability-building. The fact that service SMEs are overwhelmingly represented (93%) in the worst-performing configuration and completely absent (0%) in the most effective configuration while displaying the strongest IT infrastructure capabilities confirms that the IT productivity paradox is aggravated in service SMEs and calls for further research on this issue.     

The Border as a Resource in the Global Urban Space: A Contribution to the Cross‐Border Metropolis Hypothesis

In a globalized urban world, cross‐border metropolises represent a spatial configuration emblematic of the interplay between the space of flows and the space of places. The multiplicity of contexts and processes at work can complicate the identification of what constitutes the singularity of the concept. In order to contribute to these reflections the present article hypothesizes that the specificity of cross‐border metropolises does not fundamentally stem from the form they take or the nature of the cross‐border integration at work, but rather from the particular role played by national borders in their formation. Opening up borders offers new opportunities for border cities and urban border regions to reinforce their positions at the heart of global economic networks, and to affirm their autonomy as cross‐border regional entities. Without minimizing the possible obstructive effects of borders, it is helpful to recognize that they might also represent a resource in the composition of cross‐border metropolitan regions.     

MODELING EQUILIBRIUM REGIONAL INTEGRATION BY ENDOGENISING MARGINAL COST IN THE COURNOT FRAMEWORK

This paper examines the formation of endogenous alliances between local firms and multinational enterprises (MNE), which in turn drives regional integration in the global economy. The proposed model is an extension of the Cournot duopoly with linear demand, in which the cost function is predicated on the size of local alliance that can be interpreted as the scale of operation. The paper also makes a departure by assuming managers are not only motivated by profits, but also by the scale of operation or "empire building". Forward-looking MNEs strategize their current alliance formation activities from whence we derive a Nash equilibrium configuration of regional integration. We demonstrate that the equilibrium can be beset with multiplicity, indeterminacy, fragility, and chaotic regimes.     

Social Welfare and Income Inequality in a System of Cities

This paper develops a general-equilibrium model of a system of core-periphery cities to examine the main determinants of intra- and inter-regional income disparities. The economy is populated by a continuum of (homogeneous) unskilled and (heterogeneous) skilled workers. Unskilled workers, whose wages are determined competitively, specialize in food production in local cities; skilled workers, whose wages are determined according to a Nash bargain, manufacture a high-tech commodity in the metropolis. We establish conditions under which this core-periphery equilibrium spatial configuration emerges. We show that both intra- and inter-regional income disparities are present; the determinants of each type of disparity and the social-welfare implications are fully investigated. Our results suggest that public policy programs that improve income equality may not be necessarily welfare enhancing.     

Strategic HRM in China: Configurations and competitive advantage

The strategic HR literature suggests that a firm will perform better through internal appropriate fit among HRM practices (the configuration fit) and through external appropriate fit between a firm's HRM practices and business strategy. The present study adopts a configuration approach to identify unique patterns of HR practices and business strategy that are posited to be maximally effective. The proposed relationships were empirically tested by surveying with a sample of 241 business firms in Guangzhou, South China, to find out the extent that four HR configurations could be successfully adopted in the Chinese context. The results revealed that HR configurations are significantly related to effect in predicting overall outcome performance and turnover, but not significantly related to effect on sales growth and profit growth rates. Research findings showed not only competitive strategies are significantly related to effect on HR configurations. The results also showed significant interaction effects between HR configurations and business strategy in their effect on profit and sales growth. These results further extended support for a contingency perspective in strategic HRM to the Chinese context, with significant practical implications for managing HRM in China. © 2008 Wiley Periodicals, Inc.     

General competetive equilibrium of the spatial economy

The spatial economy is analyzed in the general equilibrium framework by considering the production and the utility functions depending on spatial distribution and sets. The geometric constraint between the location and the extension of goods supplies the equilibrium condition for space. The existence of an equilibrium is demonstrated by extending the Gale-Nikaido theorem to the case under examination. Consequently, the competetive equilibrium exists, under the assumptions of the theorem, although each point of space is heterogeneous with any other point (because of the different location): the existence is allowed by the perfect partibility of space.     

Multilateral negotiations and formation of coalitions

This paper analyses properties of games modeling multilateral negotiations leading to the formation of coalitions in an environment with widespread externalities. The payoff generated by each coalition is determined by an exogenous partition function (the parameter space). We show that in almost all games, except in a set of measure zero of the parameter space, the Markov perfect equilibrium value of coalitions and the state transition probability that describe the path of coalition formation is locally unique and stable. Therefore, comparative statics analysis are well-defined and can be performed using standard calculus tools. Global uniqueness does not hold in general, but the number of equilibria is finite and odd. In addition, a sufficient condition for global uniqueness is derived, and using this sufficient condition we show that there is a globally unique equilibrium in three-player superadditive games.     

The economics of urban yard space: An “implicit-market” model for housing attributes

A theoretical housing model is developed embodying the approach of the recent hedonic price literature. Instead of focusing on a scalar “housing service” consumption measure, the model portrays housing as a commodity with two attributes: floor space and yard space. Developers react to a consumer bid-rent function, which relates dwelling rent to floor space, yard space, and location, in choosing the profit-maximizing characteristics of their housing complexes. The spatial behavior of the developer's choice variables is investigated (an interesting question is whether yards are larger farther from the urban center), and a comparative static analysis of the housing market equilibrium is presented.     

寻找中国房价的领头羊——基于20个大城市数据的实证分析

城市房价存在明显的时空关联性。本文通过构建一个简单的消费者均衡模型,并利用全局和局部Moran指数,论证了35个大中城市的房价在空间上的相关性,进一步利用交叉谱技术分析了18个大中城市房价变动周期的关联性和领先滞后关系。结果发现：1．我国35个大中城市的房价存在显著的空间自相关。2．采用Fisher’s Kapper统计量和Kolmogorov-Smirnov统计量检验发现20个城市中除重庆和厦门外,房价波动都具有显著的周期性。3．在18个大中城市中,并不存在完全同步的房价周期。同一区域不同城市之间房价周期的关联性强度存在显著差异。即使在具有较强相关性的城市之间,房价变动也并不同步而是存在多种领先滞后关系。     

Elements of planar analysis in spatial competition

The spatial competition in price and location between firms has traditionally been analyzed on a one-dimensional space and with linear transportation costs. The present paper attempts at studying that problem on the plane if transportation costs are a strictly increasing fumction of Euclidean distance.     

Thick market externalities in a spatial model

It is natural to think of thick market externalities as spatial phenomena. When agents are in close physical proximity, potential trading partners are more numerous and less costly to reach. Counteracting such agglomeration benefits is the dispersion force due to land being an essential input in production. The distribution of economic activities over space is an outcome of how decisions on location, land demand, and the search strategy of agents interact in spatial equilibrium. More desirable locations are those that allow their occupants more abundant and less costly access to potential trading partners. In spatial equilibrium, these are the densest locations, the occupants of which benefit from the strongest thick market externalities.