An investigation on spatial price discrimination in three countries

Abstract

The economics of space, particularly the theory of spatial pricing, has remained largely outside the basic structure of traditional (nonspatial) economic theory. This isolation stems from the fact that most of the literature on the theory of commodity and/or factor pricing has been formulated in a spaceless framework. The cost of transportation has been either totally ignored or simply taken as another cost to be added to production cost. The consequence is that the significance of the "space factor" has been overlooked. In particular, the theory of price discrimination, in its traditional spaceless sense, requires the assumption of separate markets. But markets are naturally separated in a spatial framework; hence, a necessary condition for price discrimination is already fulfilled. It is also evident that the world of economic space is underscored by heterogeneous markets and, in turn, that this market condition is itself reflective of different demands and levels of competition. It is in such light that one can easily view the underlying determinants of prices in the space economy. The fundamental objectives of this dissertation are (1) to investigate the pricing structure of manufacturing firms in the United States, Japan, and West Germany, and to analyze the relevance of the theory of spatial pricing in these economies, (2) to uncover the similarities as well as differences in the spatial pricing structures of firms in different regions in the United States as well as the subject countries. Chapter I serves as our introduction. It focuses attention on the nature and status of the current question, the procedure to be followed, and related matters..