An Integrated Framework of the Market Areas and Supply Areas: Combining Market-Area Systems with Supply-Area Systems

There is a potential theoretical problem in the established framework of market-area and supply-area analysis when both approaches are investigated in an integrated framework with respect to firm location. It is argued that the mechanism of the problem is illustrated by insufficient inclusions of the notion of internal and external economies. The alternative model formulates the spatial duality theory, which enables us to internalize these economic elements into the existing theoretical framework. The impact of the additional elements is summarized by comparative-static methods, examining the spatial equilibrium of market-area and supply-area competitions.