AN APPLICATION OF THE FRONTIER PRICE CONCEPT IN SPATIAL EQUILIBRIUM-ANALYSIS

The objective of this paper is to demonstrate the usefulness of the co ncept and method of the frontier price curve which has received little attention in the field of spatial economics. A number of problems are solved using this method, First, the characteristics of representativ e spatial free-entry solutions can be differentiated in a clear and ra tional way, Secondly, the link between the social welfare levels and a ll the spatial solutions is now simply explained, and a welfare-maximi sing equilibrium solution can be easily obtained. Finally, a decrease in the freight rate has an interesting, unconventional effect of expan ding the market area.