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National Oligopolies and Economic Geography

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  • Barbara Annicchiarico

    ()
    (Department of Economics - University of Rome “Tor Vergata”)

  • Federica Orioli

    ()
    (University of Rome "Luiss Guido Carli" - University of Rome "Luiss Guido Carli")

  • Federico Trionfetti

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

Abstract

We replace monopolistic competition with national oligopolies in a model of "new economic geography". There are many possible bifurcation diagrams but, unlike in monopolistic competition, the symmetric equilibrium is always stable for low trade costs. The antitrust policy, though identical in both countries, affects the geographical distribution of firms. In turn, migration attenuates the effectiveness of the antitrust policy in eliminating collusive behavior. For high trade costs a toughening of the antitrust policy is likely to result in more agglomeration and may reduce world welfare. The antitrust policy is more likely to be welfare improving when market integration progresses.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00607641.

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Date of creation: 10 Jul 2011
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Handle: RePEc:hal:wpaper:halshs-00607641

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Keywords: Spatial Oligopoly; Antitrust Policy; Welfare;

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  1. Pierre-Philipe COMBES, 1997. "Industrial Agglomeration under Cournot Competition," Annales d'Economie et de Statistique, ENSAE, issue 45, pages 161-182.
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  14. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September.
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