Production Cost Heterogeneity in the Circular City Model

Mei Lin, Ruhai Wu (2015) Production Cost Heterogeneity in the Circular City Model. Operations Research Letters 43(4):401-404.

17 Pages Posted: 14 Dec 2013 Last revised: 3 Jun 2015

See all articles by Mei Lin

Mei Lin

Singapore Management University

Ruhai Wu

McMaster University - Michael G. DeGroote School of Business

Date Written: February 28, 2013

Abstract

We derive the closed-form solution that characterizes the equilibrium in the circular city model, when competing firms have heterogeneous production costs. Tractability issues in this setting are well-known and have not been resolved in prior work. In this paper, the equilibrium solution illustrates the effects of production costs on firms’ strategic decisions and profits and on consumer surplus.

Keywords: Circular city model, cost heterogeneity, price competition, game theory.

JEL Classification: D4, L1

Suggested Citation

Lin, Mei and Wu, Ruhai, Production Cost Heterogeneity in the Circular City Model (February 28, 2013). Mei Lin, Ruhai Wu (2015) Production Cost Heterogeneity in the Circular City Model. Operations Research Letters 43(4):401-404., Available at SSRN: https://ssrn.com/abstract=2367246 or http://dx.doi.org/10.2139/ssrn.2367246

Mei Lin

Singapore Management University ( email )

80 Stamford Road
Singapore
Singapore

HOME PAGE: http://www.mysmu.edu/faculty/mlin/

Ruhai Wu (Contact Author)

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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