On Distance Metrics in Location Problems

13 Pages Posted: 30 Nov 2012

See all articles by Christian Roessler

Christian Roessler

Erasmus University Rotterdam (EUR); Brown University

Date Written: January 2013

Abstract

Product space metrics reflect the complementarity of product attributes and lead to different geometries in multidimensional spaces. This matters for optimal product positioning. I consider how a planner should design two substitute public goods with multiple attributes to best serve different needs. Attribute complementarity affects whether a given menu dominates another (using an extension of the Pareto criterion). Distancing the goods proportionately in every attribute guarantees improvement when tastes are maximally diverse. The intuition is that the planner must minimize overlap in the populations the goods serve, since benefits are wasted in appealing to the same individual with two offerings.

JEL Classification: C65, D78, H41

Suggested Citation

Roessler, Christian, On Distance Metrics in Location Problems (January 2013). Economic Inquiry, Vol. 51, Issue 1, pp. 1087-1099, 2013, Available at SSRN: https://ssrn.com/abstract=2182949 or http://dx.doi.org/10.1111/j.1465-7295.2010.00326.x

Christian Roessler (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Brown University

Box 1860
Providence, RI 02912
United States

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