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Location as an instrument for social welfare improvement in a spatial model of cournot competition

Author

Listed:
  • Raquel Arévalo-Tomé

    (Universidad de Vigo)

  • José María Chamorro-Rivas

    (Universidad de Vigo)

Abstract

Two-stage models are the main frameworks in the analysis of oligopolistic competition. Literature has discussed some properties of such models when Cournot competition occurs in the second stage and assuming a non-spatial context. It finds that private and social optima are asymmetric. Using spatial behavior with multiple marketplaces, the outcome is different. A social planner can use the location variable as an instrument for reallocating production from the equilibrium spatial pattern to the optimal outcome while maintaining the symmetry of the model.

Suggested Citation

  • Raquel Arévalo-Tomé & José María Chamorro-Rivas, 2006. "Location as an instrument for social welfare improvement in a spatial model of cournot competition," Investigaciones Economicas, Fundación SEPI, vol. 30(1), pages 117-136, January.
  • Handle: RePEc:iec:inveco:v:30:y:2006:i:1:p:117-136
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    References listed on IDEAS

    as
    1. Gérard Gaudet & Stephen W. Salant, 1991. "Uniqueness of Cournot Equilibrium: New Results From Old Methods," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 399-404.
    2. Bergstrom, Theodore C. & Varian, Hal R., 1985. "Two remarks on Cournot equilibria," Economics Letters, Elsevier, vol. 19(1), pages 5-8.
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    Cited by:

    1. Chia-Hung Sun & Fu-Chuan Lai, 2014. "Spatial price discrimination in a symmetric barbell model: Bertrand vs. Cournot," Papers in Regional Science, Wiley Blackwell, vol. 93(1), pages 141-158, March.
    2. Sun Chia-Hung, 2014. "Cournot and Bertrand Competition in a Model of Spatial Price Discrimination with Differentiated Products," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 1-22, January.

    More about this item

    Keywords

    Spatial competition; Cournot; welfare;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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