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Industrial Agglomeration under Cournot Competition

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  • Pierre-Philipe COMBES

Abstract

In a two-region model where regional incomes are endogenous and where firms compete à la Cournot, we first show that strategic interactions may induce firms to agglomerate in the initially developed region, if transportation costs are low or economies of scale high: in the region where more firms are established, price and individual market shares effects (intra-regional competition) are counterbalanced by higher global market shares and reduction in imports (inter-regional competition). It is then shown that a regional advantage in costs, productivity or size attracts the location of new firms in this region.

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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (1997)
Issue (Month): 45 ()
Pages: 161-182

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Handle: RePEc:adr:anecst:y:1997:i:45:p:06

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Cited by:
  1. Mayer, T., 1999. "Spatial Cournot Competition and Heterogeneous Production Costs Across Locations," Papiers d'Economie Mathématique et Applications 1999.89, Université Panthéon-Sorbonne (Paris 1).
  2. Barbara Annicchiarico & Federica Orioli & Federico Trionfetti, 2011. "National Oligopolies and Economic Geography," Working Papers halshs-00607641, HAL.
  3. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany.
  4. G Ottaviano & Diego Puga, 1997. "Agglomeration in a global Economy: A Survey," CEP Discussion Papers dp0356, Centre for Economic Performance, LSE.
  5. Head, Charles Keith & Mayer, Thierry & Ries, John, 2002. "Revisiting Oligopolistic Reaction: Are FDI Decisions Strategic Complements?," CEPR Discussion Papers 3327, C.E.P.R. Discussion Papers.
  6. Gallo, Fredrik, 2005. "Cournot Competition, Market Size Effects, and Agglomeration," Working Papers 2005:23, Lund University, Department of Economics.
  7. Giulio Caianelli & Riccardo Leoncini & Anna Montini, 2001. "Struttura produttiva e sviluppo regionale di lungo periodo in Italia," Moneta e Credito, Economia civile, vol. 54(216), pages 461-485.
  8. Combes, Pierre-Philippe & Lafourcade, Miren, 2011. "Competition, market access and economic geography: Structural estimation and predictions for France," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 508-524.
  9. Ehrenfeld, Wilfried, 2004. "Die Neue Ökonomische Geographie
    [The New Economic Geography]
    ," MPRA Paper 12232, University Library of Munich, Germany.

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