| An explicitly spatial general equilibrium model is constructed with the spatial firms being monopolistically competitive. Given the mill prices charged by the producers and the transportation rates prevailing in the competitive transportation services markets, consumers choose in a two-stage process an optimal location in L C R('2), a consumption bundle and the corresponding demand for transportation services. Similar decisions are made by producers and transportation firms which face downward sloping demand curves for their outputs and labor inputs (producers), and labor inputs (transportation firms). A Negishi type equilibruim existence theorem is offered under standard assumptions. Finally, within the same framework, the convexity assumption on preferences is relaxed by considering a model with an infinite number of consumers, each locating at each point of L. |
