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Price and location equilibria in a circular market: a pure vs a mixed duopsony with a co-operative

Author

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  • Panos FOUSEKIS

    (Department of Economics, Aristotle University of Thessaloniki, Thessaloniki, Greece)

  • Dimitrios PANAGIOTOU

    (Department of Economics, University of Ioannina, Ioannina, Greece)

Abstract

The objective of the present paper is to analyze the location-price competition in circular markets where the power lies with the buyers. To this end, it considers two alternative market structures. Namely, the pure ones, where the buyers of a primary commodity are private firms, and mixed ones, where a private firm competes against a producer's co-operative. According to the results, the pure-strategy location equilibrium in both cases involves a distance between the two players larger or equal to 1/4. Nevertheless, the equilibriums are qualitatively different. In the pure duopsony, a large distance is required to prevent a price war while in the mixed duopsony, the private firm tries to stay away from the co-op in order to ensure a strictly positive profit.

Suggested Citation

  • Panos FOUSEKIS & Dimitrios PANAGIOTOU, 2013. "Price and location equilibria in a circular market: a pure vs a mixed duopsony with a co-operative," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(8), pages 341-347.
    • Handle: RePEc:caa:jnlage:v:59:y:2013:i:8:id:129-2012-agricecon
    DOI: 10.17221/129/2012-AGRICECON
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