From Local to Global Competition

This paper lays out and elaborates upon the properties of an extended Chamberlinian model with applications both in Industrial Organization and Economic Geography/ Urban Economics. The framework is used to explain the impact of some major changes over the last two centuries: reductions in transport costs, increased taste for variety, population growth, and use of technologies with greater returns to scale. To this end, we introduce a framework that has known models of oligopolistic competition with differentiated products as limit cases. These limit models include the circle, the logit, and the CES models. The integrative approach incorporates both localized and global competition, as well as price-sensitive individual.