Product heterogeneity is introduced into the context of spatial pri ce discrimination. Many of the strong properties of the standard homogeneous goods case (which attains as a limit case here) are shown to no longer be valid. In particular, the social optimum is no longer sustainable as a market...

This paper considers a generalization of the Hotelling model of spatial competition. It is shown that a pure strategy perfect equilibrium in the two-stage location-price game exists only under very stringent conditions. These conditions are in fact the conditions for profit to be concave in...

Consumer arbitrage affects international pricing in several ways. If all consumers face the same arbitrage costs, a monopolists profit increases with arbitrage costs, and world welfare declines with them (if output does not rise). If arbitrage costs differ across consumers, a monopolist may sell...