Spatial Pricing, Spatial Rents, and Spatial Welfare

Abstract

This paper presents a model of spatial equilibrium that integrates elements of spatial pricing and Thünen location models. Properties of equilibrium under mill, uniform, and discriminatory pricing regimes are explored. Three comparative propositions concerning firm, consumer, and landowner welfare that obtain under the alternative pricing schemes are presented. The welfare findings contrast with those found in the extant spatial pricing literature. In particular, the superiority of mill pricing from a consumer welfare perspective is questioned.