An Operational Model For Spatial Price Theory

This paper uses the basic properties of a general model of spatial pricing and distribution to establish an operational model that is free of many standard restrictive assumptions. In particular, the landscape viewed is not subject to the usual homogeneity assumptions of (1) an even distribution of identical buyers and (2) constant freight rates. Rather, heterogenous distributions and demands of varying forms are assumed. The operational form that is constructed herein would enable empirical testing and application over a broad range of industries and countries. A few case examples are included in the paper to help characterize the data that empirical studies could discover in a world of heterogeneities among buyers and landscapes.