Analyses on duopoly vendors in a small-open city

The duopoly model of vendors on a linear open city is developed in order to analyze equilibrium location of vendors and city residents. It is shown that at the equilibrium vendors locate at either the city edge or city center, with positive distance each other. It is also shown that the equilibrium vendor location is too far from the city center and the city size is too large comparing to the total land rent maximization situation. It is also shown that the location regulation with land rent subsidy for vendors are effective in order to improve the city welfare.