ALTERNATIVE USES OF SPATIAL MICROECONOMICS

This paper contends that classical spaceless price theory is excessively limited. In contrast, the spatial model provides a robustly general framework such that it even sheds light on the beta statistic in portfolio theory and the capital asset pricing model (CAPM), which led to 1990 Nobels for Markowitz and Sharpe. The paper further demonstrates that the spatial dimension advances other facets of economics, including product differentiation theory, waiting time and advertising impacts on prices, etc. Indeed, the subject of international dumping of goods is shown to have ties to spatial microeconomics besides imperfect competition theory. This paper's objective is therefore to demonstrate some of the inclusiveness of spatial microeconomics.