Kuninori Nakagawa

Abstract We consider the explicit introduction of firms’ choice of location into Varian’s model of sales. In our model, firms compete for both uninformed and informed consumers in a two-stage spatial competition model in which firms choose price and location. We obtain a result where both prices and locations are randomized in the subgame perfect equilibrium. The difference between each firm’s choice of location in the subgame perfect equilibrium is neither purely maximized at both ends of a line nor purely minimized at the center. Also, the expected profits in a subgame perfect equilibrium are equal to the maximum profit from an uninformed market in the absence of informed consumers. Thus, even when product differentiation is explicitly introduced into a Varian-type model, Varian’s implication can be retained; the opportunity for profit in an informed market is lost due to competition.

We consider the relationship between passenger behaviour and airline behaviour through flight scheduling and price competition. We focus on how an option for early ticket purchase affects the competition between two airlines. In our model, airlines set two ticket prices for passengers: one before the passengers know when they would take the flight; and the other after they know the most preferable time to take the flight. We find that in a subgame perfect equilibrium, airlines operate flights on an efficient schedule from the perspective of passengers.

In this article, we quantitatively analyze changes in the size distribution of municipal jurisdictions in Japan by using their rank-size distribution to capture the changes. In Japan, the central government sometimes enacts large-scale municipal mergers, aimed at creating municipalities of a certain size. Japan’s local governance policy allocates tax revenues to municipalities based on the financial shortages of each municipality, which is designed to ensure financial equality among municipalities so that the central government can evenly maintain public services, especially in rural areas. Thus, if the central government eases population discrepancy among municipalities and creates a large number of uniformly sized municipalities, then the central government can reduce subsidies to local governments. The government’s previous policies on municipal mergers were enacted to foster this sort of efficiency. We examine changes in the distribution of municipal jurisdiction sizes to determine the actual effect of municipal merger policies. We obtain the result that the great municipal mergers of the 1950s Showa era made the municipalities more equal in size, which shows that the Municipality Merger Promotion Law of 1953 had an impact on the change of the size distribution of municipalities.

This paper aims at providing a brief review over the literature on spatial competition a la Hotelling and its major extensions. We also explore an economic implication embedded in its mathematical structure. In section 1, we survey the Hotelling spatial competition and its major extensions. In section 2, we discuss its mathematical structure, focusing mainly on consumer preferences and those distributions.