Optimal zoning in the unconstrained Hotelling game |
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Authors: | Juan Carlos Bárcena‐Ruiz F Javier Casado‐Izaga Hamid Hamoudi Isabel Rodriguez |
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Affiliation: | 1. Departamento de Fundamentos del Análisis Económico I, Universidad del País Vasco, UPV/EHU, Bilbao, Spain;2. Departamento de Fundamentos del Análisis Económico, Universidad Rey Juan Carlos, Madrid, Spain |
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Abstract: | This paper studies a zoning mechanism that gives the optimal locations of two firms in a linear city under mill prices. A regulator biased towards consumers allows a central area of the city to be shared by firms and consumers and thus firms are not allowed to locate outside the city limits. A regulator more concerned about firms extends this central zone outside the city limits and the city has a residential use only if the firms so decide. Finally, a regulator highly biased towards firms allows them to locate only beyond a set distance from the city, so there is a strip of land outside the city but close to its boundaries, for alternative uses. |
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Keywords: | L13 R38 Zoning regulation firms' locations |
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