Finding Locations for Public Service Centres That Compete with Private Centres: Effects of Congestion*

We propose a locational model for public service centres when they compete with private centres. Customers may be captured by the centre offering shorter distance or lower waiting times. Both types of centres provide paid services to high-income customers, and public centres also provide subsidised services to low-income customers. Equilibrium must be found in public centres between low-income population coverage and high-income population capture. We analyse the effects of waiting times on the design of the public service and apply the model to data for Santiago, Chile.