Pareto optimal allocation and price equilibrium for a duopoly with negative externality

A spatial competition model involving decisions made by consumers and firms is proposed. A regulating agent assigns the demand, taking into account the price, transport and externality cost, and minimizing the joint consumer cost to obtain a Pareto optimal allocation. Assuming the Pareto optimal all...

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Bibliographic Details
Published in:Annals of operations research 2002-10, Vol.116 (1), p.129
Main Authors: Dorta-Gonzalez, Pablo, Dolores-Rosa Santos-Penate, Suarez-Vega, Rafael
Format: Article
Language:English
Subjects:
Competition
Consumers
Duopoly
Equilibrium
Investigations
Operations research
Pareto optimum
Prices
Profits
Public health
Studies
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Summary:A spatial competition model involving decisions made by consumers and firms is proposed. A regulating agent assigns the demand, taking into account the price, transport and externality cost, and minimizing the joint consumer cost to obtain a Pareto optimal allocation. Assuming the Pareto optimal allocation, firms fix prices in order to maximize the profit. An equilibrium problem is studied and some results are presented. The problem and results are illustrated with an example. [PUBLICATION ABSTRACT]
ISSN:0254-5330
1572-9338
DOI:10.1023/A:1021380314032