| Summary: | The article focuses on the price effects of spatial competition. A recent paper by D.R. Capozza and R.Van Order (CVO) (1977) proposed a generalization of the M.L. Greenhut-M.H. Hwang-H. Ohta (OHO) (1975) analysis of pricing under three alternative types of spatial competition. The GHO analysis was based on a short-run model in which the locations of firms are assumed to be fixed. CVO accordingly proposed relaxation of this rigid assumption to examine if the GHO results also apply to the long-run zero-profit industry equilibrium. They confirmed the GHO results, which, however, they also contended, require certain particular modifications as well in the light of their own models. The CVO contribution lies in their simple model analysis of long-run industry equilibrium conditions--a generalization of the GHO analysis. The article also briefly reviews the theory of spatial monopoly. Initially some fundamental assumptions are set forth. This is followed by derivation of the market demand function for the spatial monopolist. The market demand in turn is shown to be more or less elastic than the assumed basic demand function depending on the curvature of the latter curve. The article also comments on the so-called "paradox of spatial monopoly."
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