Geographical Competition

In our discussion in the last chapter of producers’ behaviour in geographical space, assumptions of many producers and free entry by new producers were employed to warrant perfectly competitive resolution of market prices and quantities. On the other hand, to investigate industrial plant location, the other extreme of a natural monopolist, bound by government regulation as to price and quantity output, was invoked. This reduced the problem to a cost-minimizing one. What we often see about us lies between these extremes. Frequently, it is a matter of a few large producers jostling for a national market, constrained to some degree by government control, real or potential. This is the case with the manufacture of cars, beer, processed foods, inter-city travel, television and newspapers. The behaviour of such oligopolists becomes a ceaseless game with no predictable outcome. It is impossible to determine a market equilibrium in such competitive circumstances and thus to judge whether it is socially desirable. There is a contention that, in general, oligopolistic competition leads to excessive similarity of products, which is not in accord with the best interests of all of society. In geographical terms, this centripetal force takes the form of locating production in the same place. More generally, it involves closing the spectrum of product type and quality on offer. The debate on this issue has usually been couched in terms of the geography of production. This is so because the physical distance and transport cost separation between producers is a simple dimension along which to measure their dissimilarity.