Jacques-François Thisse

Bio: Jacques-François Thisse is an academic researcher from Economic Policy Institute. The author has contributed to research in topics: Competition (economics) & Monopolistic competition. The author has an hindex of 80, co-authored 531 publications receiving 29570 citations. Previous affiliations of Jacques-François Thisse include University of Liège & Centre national de la recherche scientifique.

Discrete Choice Theory of Product Differentiation

Abstract: Product differentiation - in quality, packaging, design, color, and style - has an important impact on consumer choice It also provides a rich source of data that has been largely unexplored because there has been no generally accepted way to model the information available This important study shows that an understanding of product differentiation is crucial to understanding how modern market economies function and that differentiated markets can be analyzed using discrete choice models of consumer behavior It provides a valuable synthesis of existing, often highly technical work in both differentiated markets and discrete choice models and extends this work to establish a coherent theoretical underpinning for research in imperfect competition The discrete choice approach provides an ideal framework for describing the demands for differentiated products and can be used for studying most product differentiation models in the literature By introducing extra dimensions of product heterogeneity, the framework also provides richer models of firm location Discrete Choice Theory of Product Differentiation introduces students and researchers to the field, starting at the beginning and moving through to frontier research The first four chapters detail the consumer-theoretic foundations underlying choice probability systems (including an overview of the main models used in the psychological theory of choice), while the next four chapters apply the probabilistic choice approach to oligopoly models of product differentiation, product selection, and location choice The final chapter suggests various extensions of the models presented as well topics for further research

On hotelling's "Stability in competition"

Abstract: The purpose of this note is to show that the so-called Principle of Minimum Differentiation, as based on Hotelling’s 1929 paper “Stability in Competition” is invalid. The purpose of this note is to show that the so-called Principle of Minimum Differentiation, as based on Hotelling’s 1929 celebrated paper (Hotelling [3]), is invalid. Firstly, we assert that, contrary to the statement formulated by Hotelling in his model, nothing can be said about the tendency of both sellers to agglomerate at the center of the market. The reason is that no equilibrium price solution will exist when both sellers are not far enough from each other. Secondly, we consider a slightly modified version of Hotelling’s example, for which there exists a price equilibrium solution everywhere. We show however that, for this version, there is a tendency for both sellers to maximize their differentiation. This example thus constitutes a counterexample to Hotelling’s conclusions. We shall first recall Hotelling’s model and notations. On a line of length `, two sellers A and B of a homogeneous product, with zero production cost, are located at respective distances a and b from the ends of this line (a+ b ≤ `; a ≥ 0, b ≥ 0). Customers are evenly distributed along the line, and each customer consumes exactly a single unit of this commodity per unit of time, irrespective of its price. Since the product is homogeneous, a customer will buy from the seller Econometrica, 47(5), 1145–1150, September 1979. Center for Operations Research and Econometrics

Economics of agglomeration

Abstract: We address the fundamental question arising in geographical economics: why do economic activities agglomerate in a small number of places? The main reasons for the formation of economic clusters involving firms and/or households are analyzed: (i) externalities under perfect competition; (ii) increasing returns under monopolistic competition; and (iii) spatial competition under strategic interaction. We review what has been accomplished in these three domains and identify a few general principles governing the organization of economic space. A few alternative, new approaches are also proposed. J. Japan. Int. Econ., December 1996, 10 (4), pp. 339–378. Kyoto University and University of Pennsylvania; and CORE, Universite Catholique de Louvain and CERAS–ENPC (URA 2036, CNRS).

Economics of Agglomeration: Cities, Industrial Location, and Regional Growth

Abstract: This book provides the first unifying analysis of the range of economic reasons for the clustering of firms and households Its goal is to explain further the trade-off between various forms of increasing returns and different types of mobility costs The main focus of the analysis is on cities, but it also explores the formation of other agglomerations, such as commercial districts within cities, industrial clusters at the regional level, and the existence of imbalance between regions

Automobile prices in market equilibrium

Abstract: This paper develops techniques for empirically analyzing demand and supply in differentiated products markets and then applies these techniques to analyze equilibrium in the U.S. automobile industry. Our primary goal is to present a framework which enables one to obtain estimates of demand and cost parameters for a class of oligopolistic differentiated products markets. These estimates can be obtained using only widely available product-level and aggregate consumer-level data, and they are consistent with a structural model of equilibrium in an oligopolistic industry. When we apply the tech- niques developed here to the U.S. automobile market, we obtain cost and demand parameters for (essentially) all models marketed over a twenty year period.

Technology, Geography, and Trade

Abstract: We develop a Ricardian trade model that incorporates realistic geographic features into general equilibrium It delivers simple structural equations for bilateral trade with parameters relating to absolute advantage, to comparative advantage (promoting trade), and to geographic barriers (resisting it) We estimate the parameters with data on bilateral trade in manufactures, prices, and geography from 19 OECD countries in 1990 We use the model to explore various issues such as the gains from trade, the role of trade in spreading the benefits of new technology, and the effects of tariff reduction