Fu-Chuan Lai

Urban Configurations with Suburban Employment by a Monopoly Vendor

Lai and Tsai (2008) incorporate a monopoly vendor in the Alonso-Mills-Muth model and find that the vendor will locate at one of the city boundaries. This article extends Lai and Tsai (2008) by embodying the production side and labor market for the monopoly. It endogenizes the composite good price, the wage, and the location of the subcenter to investigate the pricing behavior, the determination of the wage in the subcenter, and the urban configurations. It is shown that the monopoly will locate itself in the suburb to form a subcenter. Moreover, the rent-maximizing government will regulate the vendor to locate itself to form an overlapping land rent pattern between the central city and the suburban area.

Prices, Locations and Welfare When an Online Retailer Competes with Heterogeneous Brick-and-Mortar Retailers

This study proposes a novel spatial model in which an online retailer competes with heterogeneous brick‐and‐mortar retailers. Consumers are assumed to be non‐uniformly distributed along an urban‐rural line, and online transactions provide savings in transportation costs at the expense of distaste costs. Among other results, we show that the surviving brick‐and‐mortar retailers eventually move toward densely populated (urban) areas after the entry of the online retailer. Consumer welfare, the policy of not taxing online business, and the socially optimal number of retailers are also analyzed.

Spatial Cournot competition in a circular city with more than two dispatches

This paper investigates spatial Cournot competition in a circular city, where the maximal service range of a vehicle is less than half of the perimeter, and a firm needs to initiate more than two dispatches to serve the whole market. We examine a multi-stage game of location and transportation mode choices, and the subsequent quantity competition between duopoly firms. The findings reveal that non-maximum dispersion is the unique location equilibrium when duopoly firms deliver products in different transportation modes or when the transportation mode decisions are made endogenously and the fixed cost of a transportation instrument is relatively high.

Nesting Horizontal and Vertical Differentiation with Location Choices

This study solves a location‐then‐price game in which horizontal and vertical differentiation are combined using an asymmetric distribution of consumers’ taste. Boundary locations are robust when the taste disparity of the population is not large and out‐of‐market locations are not allowed. Firms may have incentives to move either inside or outside the market in other situations, so the equilibrium prices are never differentiated. The restrictions of vertical differentiation under this framework are further examined. A model with the entrance of a vertically differentiated product is also discussed.