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Harmonic symmetries of imperfect competition on circular city

  • Hennessy, David A.
  • Lapan, Harvey E.

Taking location as given, we study imperfect competition on a circular city. In Bertrand oligopoly, we identify price harmonics as a function of firm unit costs and locations. The sum of oligopoly profits is larger when costs and/or locations are more dispersed in the [`]dihedral majorization' sense. This also tends to be the case in which prices are more variable. We study how phase shifts between cost parameters and inter-firm distance parameters change production and oligopoly profits. An exact characterization of production patterns is developed in terms of the eigenvalues for what we call the price harmonics matrix. The same techniques are applied to Cournot oligopoly with spatial externalities on circular city. Solutions are compared with first-best. Production patterns can differ markedly when cost spillovers are negative.

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Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 45 (2009)
Issue (Month): 1-2 (January)
Pages: 124-146

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Handle: RePEc:eee:mateco:v:45:y:2009:i:1-2:p:124-146
Contact details of provider: Web page: http://www.elsevier.com/locate/jmateco

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