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Product differentiation in a spatial Cournot model with asymmetric demand

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  • Kai Andree

    ()
    (University of Potsdam)

  • Juljana Calaki

    ()
    (University of Bonn)

Abstract

This paper considers a spatial discrimination Cournot model with asymmetric demand. We use the geographical interpretation of the linear market and introduce differentiated products. We analyze a location-quantity game and show that agglomeration or dispersed locations may arise, depending on parameter combinations. The degree of differentiation plays an important role in location choice if the demand is asymmetric. The higher the degree of differentiation between the products the more likely is agglomeration. Only cases with a low degree of differentiation and a relatively low difference in market size leads to the absence of agglomeration in the larger market.

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File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I2-P105.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 31 (2011)
Issue (Month): 2 ()
Pages: 1125-1130

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Handle: RePEc:ebl:ecbull:eb-11-00074

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Related research

Keywords: Spatial Cournot competition; Agglomeration; Asymmetric demand structure; Product differentiation;

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  1. d'ASPREMONT, Claude & GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On Hotelling's "Stability in competition"," CORE Discussion Papers RP -385, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial price discrimination and location choice with labor markets," The Annals of Regional Science, Springer, vol. 52(1), pages 103-119, January.
  2. Kai Andree, 2013. "Collusion in Spatially Separated Markets with Quantity Competition," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 309-318, September.

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