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Industrial Agglomeration under Cournot Competition

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  • Pierre-Philippe Combes

Abstract

In a two-region model where regional incomes are endogenous and where firms compete à la Cournot, we first show that strategic interactions may induce firms to agglomerate in the initially developed region, if transportation costs are low or economies of scale high: in the region where more firms are established, price and individual market shares effects (intra-regional competition) are counterbalanced by higher global market shares and reduction in imports (inter-regional competition). It is then shown that a regional advantage in costs, productivity or size attracts the location of new firms in this region.

Suggested Citation

  • Pierre-Philippe Combes, 1997. "Industrial Agglomeration under Cournot Competition," Annals of Economics and Statistics, GENES, issue 45, pages 161-182.
    • Handle: RePEc:adr:anecst:y:1997:i:45:p:161-182
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    File URL: http://www.jstor.org/stable/20076054
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    1. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o1o6tag is not listed on IDEAS
    2. Barbara Annicchiarico & Federica Orioli & Federico Trionfetti, 2012. "National oligopolies and economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 71-99, February.
    3. Gallo, Fredrik, 2005. "Cournot Competition, Market Size Effects, and Agglomeration," Working Papers 2005:23, Lund University, Department of Economics.
    4. Keith Head & Thierry Mayer & John Ries, 2002. "Revisiting Oligopolistic Reaction: Are Decisions on Foreign Direct Investment Strategic Complements?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 453-472, September.
    5. Head, K. & Mayer, T. & Ries, J., 2000. "Revisiting Oligopolistic Reaction : Are FDI Decisions Strategic Complements?," Papiers d'Economie Mathématique et Applications 2000.49, Université Panthéon-Sorbonne (Paris 1).
    6. Combes, Pierre-Philippe & Lafourcade, Miren, 2011. "Competition, market access and economic geography: Structural estimation and predictions for France," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 508-524.
    7. Mayer, Thierry, 2000. "Spatial Cournot competition and heterogeneous production costs across locations," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 325-352, May.
    8. Combes, Pierre-Philippe, 2000. "Economic Structure and Local Growth: France, 1984-1993," Journal of Urban Economics, Elsevier, vol. 47(3), pages 329-355, May.
    9. Combes, Pierre-Philippe & Lafourcade, Miren, 2001. "Transport Cost Decline and Regional Inequalities: Evidence from France," CEPR Discussion Papers 2894, C.E.P.R. Discussion Papers.
    10. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669, Elsevier.
    11. Mion, Giordano, 2004. "Spatial externalities and empirical analysis: the case of Italy," Journal of Urban Economics, Elsevier, vol. 56(1), pages 97-118, July.
    12. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany.
    13. Haiwen Zhou, 2022. "The Choice of Technology and Economic Geography," International Economic Journal, Taylor & Francis Journals, vol. 36(1), pages 1-18, January.
    14. Keith Head & Thierry Mayer & John Ries, 2002. "Revisiting Oligopolistic Reaction: Are Decisions on Foreign Direct Investment Strategic Complements?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 453-472, September.
    15. Haiwen Zhou, 2007. "Oligopolistic Competition And Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 915-933, December.
    16. Fabien Candau, 2008. "Entrepreneurs' Location Choice And Public Policies: A Survey Of The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 909-952, December.
    17. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
    18. Giulio Caianelli & Riccardo Leoncini & Anna Montini, 2001. "Struttura produttiva e sviluppo regionale di lungo periodo in Italia," Moneta e Credito, Economia civile, vol. 54(216), pages 461-485.
    19. G Ottaviano & Diego Puga, 1997. "Agglomeration in a global Economy: A Survey," CEP Discussion Papers dp0356, Centre for Economic Performance, LSE.
    20. repec:hal:spmain:info:hdl:2441/10191 is not listed on IDEAS
    21. Thisse, Jacques-François & picard, pierre & Toulemonde, Eric, 2002. "Economic Geography and the Role of Profits," CEPR Discussion Papers 3385, C.E.P.R. Discussion Papers.

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