Income Diffusion and Regional Economics

Abstract

Space often is important in considering economic events. At the San Miniato NATO Institute, entitled ‘Evolving Geographical Structures,’ an example was given where competitive interactions between spatially distributed markets had implications for spatial price variation (Haining, 1983). There was evidence to suggest that retailers engaged in local or neighbourhood price comparisons, and that the spatial distribution of markets had implications for certain properties of the macro or regional price distribution, most notably overall price variability (Haining, 1985). This line of work has since focused on two models of spatial pricing with different mechanisms for binding together the space economy (Haining, 1984). In one model the mechanisms were retailer competitiveness and ‘local price awareness,’ and in the other they were consumer price sensitivity and intersite demand elasticities. Such mechanisms, it was suggested, underlie the existence of interpretable patterns in the spatial distribution of prices.