Journal Article The Price Effects of Spatial Competition Get access H. Ohta H. Ohta Aoyama Gakuin University and University of Houston Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 48, Issue 2, April 1981, Pages 317–325, https://doi.org/10.2307/2296888 Published: 01 April 1981 Article history Received: 01 August 1979 Accepted: 01 August 1980 Published: 01 April 1981

Treble correct when he states that the integral representing consumer surplus is increasing in D(, where Do stands for market radius for the firm. But he incorrect in his speculation that the CV solution under L6schian competition according/v yields an increasingly smaller consumer surplus in the aggregate. Note that the decreasing surplus with decreasing Do created by each one of the individual firms which are increasing in number under free entrv. The aggregate consumer surplus therefore not necessarily greater under spatial monopoly than it under conditions of spatial competition. In fact, it can readily be shown to be increased, not decreased, with an increasing entry under the CV model. To prove our contention consider the average consumer surplus a la W. Holahan [3] which given below by evaluating Treble's integral S in [4, p. 1328] and in turn dividing both sides of the resulting equation by Do:

[The purpose of this paper is to set forth a general theorem on the shape of free spatial market demand curve and on the shape of the spatial competitive market demand curve. It is demonstated that the free spatial demand curve is necessarily convex to the origin regardless of the shape of the shape of the individual demands which comprise it. But the shape of the spatial competitive market deamnd curve is shown to depend upon the behavioral assumptions used in the competitive. Three basically different competitive models are presented with contrasting results. Elasticity and price effects under each type of competition are determined and evaluated as is the effect of spatial competition on prices. Different interpretations of price data tend to result from conceptions of aggregate spatial demand curves vis a vis the classical spaceless demand curve.]