Imperfect competition and congestion in the City



B.3 Long-run equilibrium

Note that if n is log-concave, then n (n - 1) Γd is increasing is n, as well as
n (n - 1) Γw and therefore the markup pe - c - we is decreasing in n (see [2]).
As a consequence,
πe = N(p nwc) (F + S) is decreasing at least in an
hyperbolic manner and there exists a unique free entry equilibrium given by:

1    [         μd         +         μw         ʌ = (F + S)

n2 (n 1) I R∞∞ h2 (x) Hn-2 (x) dx   R∞∞ g2 (x) Gn-2 (x) dx j      N

C Proof of Proposition 4

The profit function is (where N is normalized to one, w.l.o.g.):
ei(wi,w-i,p) = £gi(wi) Wi c ΛhPw)] NPw (F + S).

The first-order condition is:

de<<w-w-<-p> = μ'dg/w ) : Pw + r9,fWi) Wi c hpiw] P = 0.

∂wi             dwi          i                              i   dwi

Moreover, we have:

2ei(wi,w-i,p)
∂wi


μd2gi(wi) Pw + 2 μdgi(wi)
dw2 J i y dwi


л dPwh μ w y
dwi         dwi


+ rgi (wi) wic hPiw ]


d2Piw
dwi2


We wish to show that any turning point is a maximum:


2πei (wi, wi, p)


Bw2


< 0.

FOC


If this condition is satisfied everywhere, the profit function πei (wi, w-i, p) is
quasi-concave, and the candidate symmetric equilibrium is Nash.

Note that, the first-order condition equation can be rewritten as:

gi (wi) wi c hPiw


d dgi(wi)
y dwi


1 Piw


dP w
i
dwi


Using this expression, we obtain after simplifications:

31



More intriguing information

1. TOMOGRAPHIC IMAGE RECONSTRUCTION OF FAN-BEAM PROJECTIONS WITH EQUIDISTANT DETECTORS USING PARTIALLY CONNECTED NEURAL NETWORKS
2. Computational Experiments with the Fuzzy Love and Romance
3. ISSUES AND PROBLEMS OF IMMEDIATE CONCERN
4. The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach
5. Foreign Direct Investment and the Single Market
6. Governance Control Mechanisms in Portuguese Agricultural Credit Cooperatives
7. The name is absent
8. Spatial patterns in intermunicipal Danish commuting
9. Language discrimination by human newborns and by cotton-top tamarin monkeys
10. Bridging Micro- and Macro-Analyses of the EU Sugar Program: Methods and Insights