Built on the location model, this paper studies the rivalry of two firms in an industry through two-part tariffs. It is found that kinky profit functions are responsible for the coincidence of imperfectly competitive equilibrium and cartelization outcome. A duopoly likely results in higher entry fees and industry profits and lower net consumers's surplus is ambiguous.
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Paper provided by La Trobe - Department of Economics in its series Papers with number
00.11.
Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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