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Quantity Competition in a Spatial Model

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  • Jonathan H Hamilton
  • James F. Klein
  • Eytan Sheshinski
  • Steven M. Slutsky

Abstract

The authors analyze a duopoly model where firms first choose locations on a line segment and then choose quantities in the second stage. Pure strategy quantity equilibria fail to exist for locations close together. For low transport costs, near agglomeration occurs and the firms choose locations where pure strategy quantity equilibria exist. As transport costs rise, firms become less direct competitors as they move away from the center of the market. Coauthors are James F. Klein, Eytan Sheshinski, and Steven M. Slutsky. We analyse a duopoly model where firms first choose locations on a line segment and then choose quantities in the second stage. Pure strategy quantity equilibria fail to exist for locations close together. For low transport costs, near agglomeration occurs and the firms choose locations where pure strategy quantity equilibria exist. As transport costs rise, firms become less direct competitors as they move away from the centre of the market. Coauthors are James F. Klein, Eytan Sheshinski, and Stephen M. Slutsky.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 27 (1994)
Issue (Month): 4 (November)
Pages: 903-17

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Handle: RePEc:cje:issued:v:27:y:1994:i:4:p:903-17

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Citations

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Cited by:
  1. Rath, Kali P. & Zhao, Gongyun, 2001. "Two stage equilibrium and product choice with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 19(9), pages 1441-1455, November.
  2. Jeroen Hinloopen & Stephen Martin, 2013. "Costly Location in Hotelling Duopoly," Tinbergen Institute Discussion Papers 13-101/VII, Tinbergen Institute.
  3. Ricardo Biscaia & Isabel Mota, 2011. "Models of Spatial Competition: A critical review," ERSA conference papers ersa11p1518, European Regional Science Association.
  4. Pal, Debashis, 1998. "Does Cournot competition yield spatial agglomeration?," Economics Letters, Elsevier, vol. 60(1), pages 49-53, July.
  5. Dimitrios Xefteris & Nicholas Ziros, 2014. "A Spatial Model of Perfect Competition," University of Cyprus Working Papers in Economics 05-2014, University of Cyprus Department of Economics.
  6. Stefano Colombo, 2012. "Collusion in two models of spatial competition with quantity-setting firms," The Annals of Regional Science, Springer, vol. 48(1), pages 45-69, February.
  7. Pal, Debashis & Sarkar, Jyotirmoy, 2002. "Spatial competition among multi-store firms," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 163-190, February.
  8. Gu, Yiquan & Wenzel, Tobias, 2009. "A note on the excess entry theorem in spatial models with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 567-571, September.
  9. Gupta, Barnali & Pal, Debashis & Sarkar, Jyotirmoy, 1997. "Spatial Cournot competition and agglomeration in a model of location choice," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 261-282, June.
  10. Simon P. Anderson, 1989. "Location Equilibria Under Alternative Solution Concepts," Discussion Papers 885, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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