Our novel approach enriches the general additive monopolistic competition model with a space of product characteristics: consumers’ “ideal varieties”. This paper bridges two traditions in modelling markets with horizontal product differentiation: the Hotelling’s (Econ J 39(153):41–57, 1929) “address economy” and Chamberlinian Dixit–Stiglitz monopolistic competition. Unlike Hotelling, our partially localised competition involves intersecting zones of service among producers. When population grows, increasing/decreasing elasticity of elementary utility governs increasing/decreasing prices. Increasing market size induces an increase in the firm density, but with the presence of transport cost, the firm’s range of service decreases, consumers concentrate their consumption closer to their ideals, and there are savings in transport costs. Thereby, finer matching among buyers/sellers becomes the important welfare benefit from a thicker market. That is, our model sets a finer matching of goods to tastes as a new source of gains rather than variety being the only reason for gains. Free entry remains socially excessive, under natural preferences.

我们的新方法通过产品特征空间丰富了一般的附加垄断竞争模型：消费者的“理想品种”。本文通过横向产品差异化建模市场的两个传统：Hotelling (Econ J 39(153):41–57, 1929)“地址经济”和张伯林的 Dixit-Stiglitz 垄断竞争。与 Hotelling 不同，我们部分本地化的竞争涉及生产者之间的交叉服务区域。当人口增长时，基本效用的增加/减少弹性支配价格的增加/减少. 市场规模的增加会导致企业密度的增加，但随着运输成本的存在，企业的服务范围缩小，消费者将消费集中在更接近他们的理想上，从而节省了运输成本。因此，买家/卖家之间更精细的匹配成为更厚的市场的重要福利。也就是说，我们的模型将商品与口味的更精细匹配设置为新的收益来源，而不是多样性是收益的唯一原因。在自然偏好下，自由进入在社会上仍然是过度的。