chapter  4
18 Pages

Dynamics

C-3. Spatial competition with land market: For illustration of this, consider a scenario in which two independent supermarkets are planning to locate in a residential area. The location of the supermarkets affects the distribution of households and land rent in the area. The competition for customers will tend to force the two supermarkets towards the center. However, even neglecting the land consumption by each supermarket, high land rent will decrease the purchasing ability of consumers. Thus, the perceived effects on land rent will tend to keep them apart. This is a Hotelling-problem with a land market. Fujita and Thisse [48] reports some interesting results on this problem. A similar problem could be developed in the context of the Losch model.