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On the Existence of Spatial Monopolies Under Free Entry

Author

Listed:
  • Yves Zenou

    (University of Southampton, GAINS, Universite du Maine and CEPR)

  • Sebastien Steinmetz

    (INRA-Grignon, Laboratoire d'Econometrie de l''Ecole Polytechnique)

Abstract

This paper studies the question of entry in the circular city model when the pre-entry market structure involves local monopolies. In contrast with Salop (1979), we show that the unit profit rate of incumbent monopolists is strictly positive and bounded above. The upper bound decreases with the size of gaps and with the number of incumbents.

Suggested Citation

  • Yves Zenou & Sebastien Steinmetz, 2001. "On the Existence of Spatial Monopolies Under Free Entry," Economics Bulletin, AccessEcon, vol. 4(8), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-01d40002
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    References listed on IDEAS

    as
    1. MacLeod, W.B. & Norman, G. & Thisse, J.-F., 1988. "Price discrimination and equilibrium in monopolistic competition," International Journal of Industrial Organization, Elsevier, vol. 6(4), pages 429-446.
    2. Norman, George & Thisse, Jacques-Francois, 1996. "Product Variety and Welfare under Tough and Soft Pricing Regimes," Economic Journal, Royal Economic Society, vol. 106(434), pages 76-91, January.
    3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    4. Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
    5. Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
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    Citations

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    Cited by:

    1. Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005. "Organized crime, corruption and punishment," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1639-1663, September.
    2. Zenou, Yves, 1999. "Comment lutter contre le chômage lorsque les travailleurs sont hétérogènes?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 519-536, mars-juin.

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    More about this item

    Keywords

    entry;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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