Partial Agglomeration or Dispersion in Spatial Cournot Competition
We revisit works by Pal and Matsushima, which, respectively, present different equilibrium locations. We consider nonlinear transport costs and show that Pal's result (dispersion) is more robust than Matsushima's (partial agglomeration). Pal's result holds true for any transport cost function, while Matsushima's does not hold under strong concavity or convexity of the transport cost function. If we consider sequential move of location, Pal's result holds for any transport costs. On the other hand, Matsushima's does not hold except for linear transport cost. We also discuss welfare and show that nonlinearity of the transport cost function yields rich welfare implications.
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Volume (Year): 72 (2005)
Issue (Month): 1 (July)
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