IDEAS home Printed from https://ideas.repec.org/a/spr/anresc/v64y2020i1d10.1007_s00168-019-00952-9.html
   My bibliography  Save this article

Spatial Cournot competition in two intersecting circular markets

Author

Listed:
  • Wen-Chung Guo

    (National Taipei University)

  • Fu-Chuan Lai

    (Academia Sinica
    National Chengchi University)

Abstract

This paper analyzes the location equilibrium in two intersecting circular markets where two identical firms engage in Cournot competition. It is shown that each of the two intersection points occupied by one of the firms is the unique fully symmetric location equilibrium and also the social optimum, which is neither maximal nor minimal differentiation. The intuition of our result is that by each firm locating at each of the intersection points, firms can minimize their transport costs and partially avoid competition, compared with both locating at one of the intersection points. Our finding coincides with the real-world phenomenon that transport hubs may attract the presence of more firms.

Suggested Citation

  • Wen-Chung Guo & Fu-Chuan Lai, 2020. "Spatial Cournot competition in two intersecting circular markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(1), pages 37-56, February.
    • Handle: RePEc:spr:anresc:v:64:y:2020:i:1:d:10.1007_s00168-019-00952-9
    DOI: 10.1007/s00168-019-00952-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00168-019-00952-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00168-019-00952-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Braid, Ralph M., 1989. "Retail competition along intersecting roadways," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 107-112, February.
    2. Chia-Hung Sun, 2010. "Spatial Cournot competition in a circular city with directional delivery constraints," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(2), pages 273-289, October.
    3. Chia-Ming Yu & Fu-Chuan Lai, 2003. "Cournot competition in spatial markets: Some further results," Papers in Regional Science, Springer;Regional Science Association International, vol. 82(4), pages 569-580, November.
    4. Wang, Tao & Wang, Ruqu, 2018. "A network-city model of spatial competition," Economics Letters, Elsevier, vol. 170(C), pages 168-170.
    5. Germano, Fabrizio & Meier, Martin, 2013. "Concentration and self-censorship in commercial media," Journal of Public Economics, Elsevier, vol. 97(C), pages 117-130.
    6. Gupta, Barnali & Lai, Fu-Chuan & Pal, Debashis & Sarkar, Jyotirmoy & Yu, Chia-Ming, 2004. "Where to locate in a circular city?," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 759-782, June.
    7. Buechel, Berno & Roehl, Nils, 2015. "Robust equilibria in location games," European Journal of Operational Research, Elsevier, vol. 240(2), pages 505-517.
    8. Toshihiro Matsumura & Daisuke Shimizu, 2006. "Cournot and Bertrand in shipping models with circular markets," Papers in Regional Science, Wiley Blackwell, vol. 85(4), pages 585-598, November.
    9. Pal, Debashis, 1998. "Does Cournot competition yield spatial agglomeration?," Economics Letters, Elsevier, vol. 60(1), pages 49-53, July.
    10. Shimizu, Daisuke, 2002. "Product differentiation in spatial Cournot markets," Economics Letters, Elsevier, vol. 76(3), pages 317-322, August.
    11. Carlo Reggiani, 2014. "Spatial Price Discrimination in the Spokes Model," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 628-649, September.
    12. Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 62-87, February.
    13. Daisuke Shimizu & Toshihiro Matsumura, 2003. "Equilibria for circular spatial Cournot markets," Economics Bulletin, AccessEcon, vol. 18(1), pages 1-9.
    14. Toshihiro Matsumura & Noriaki Matsushima, 2012. "Spatial Cournot competition and transportation costs in a circular city," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 33-44, February.
    15. Matsushima, Noriaki, 2001. "Cournot competition and spatial agglomeration revisited," Economics Letters, Elsevier, vol. 73(2), pages 175-177, November.
    16. Stefano Colombo, 2016. "Location choices with a non-linear demand function," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 215-226, March.
    17. Chia‐Ming Yu, 2007. "Price and quantity competition yield the same location equilibria in a circular market," Papers in Regional Science, Wiley Blackwell, vol. 86(4), pages 643-655, November.
    18. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, July.
    19. Hoernig, Steffen & Jay, Stephan & Neumann, Karl-Heinz & Peitz, Martin & Plückebaum, Thomas & Vogelsang, Ingo, 2012. "The impact of different fibre access network technologies on cost, competition and welfare," Telecommunications Policy, Elsevier, vol. 36(2), pages 96-112.
    20. Anderson, Simon P & Neven, Damien J, 1991. "Cournot Competition Yields Spatial Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 793-808, November.
    21. Debashis Pal & Jyotirmoy Sarkar, 2006. "Spatial Cournot Competition among Multi-Plant Firms in a Circular City," Southern Economic Journal, John Wiley & Sons, vol. 73(1), pages 246-258, July.
    22. repec:ebl:ecbull:v:18:y:2003:i:1:p:1-9 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chia-Hung Sun & Jyh-Fa Tsai & Fu-Chuan Lai, 2017. "Spatial Cournot competition in a circular city with more than two dispatches," The Japanese Economic Review, Japanese Economic Association, vol. 68(4), pages 413-442, December.
    2. Chia-Hung Sun, 2014. "Spatial Cournot Competition in a Linear City with Directional Delivery Constraints," The Japanese Economic Review, Japanese Economic Association, vol. 65(3), pages 344-374, September.
    3. Wen-Chung Guo & Fu-Chuan Lai, 2015. "Spatial Cournot competition in a linear–circular market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 819-834, May.
    4. Chia-Hung Sun & Jyh-Fa Tsai & Fu-Chuan Lai, 2017. "Spatial Cournot Competition in a Circular City with More than Two Dispatches," The Japanese Economic Review, Springer, vol. 68(4), pages 413-442, December.
    5. Colombo, Stefano, 2011. "On the rationale of spatial discrimination with quantity-setting firms," Research in Economics, Elsevier, vol. 65(3), pages 254-258, September.
    6. Toshihiro Matsumura & Noriaki Matsushima, 2012. "Spatial Cournot competition and transportation costs in a circular city," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 33-44, February.
    7. Takanori Ago, 2013. "Demand creation and location: a variable consumer-distribution approach in spatial competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(3), pages 775-792, December.
    8. AGO Takanori, 2015. "Competition between Cities and Their Spatial Structure," Discussion papers 15110, Research Institute of Economy, Trade and Industry (RIETI).
    9. Toshihiro Matsumura & Daisuke Shimizu, 2008. "A Noncooperative Shipping Cournot Duopoly With Linear‐Quadratic Transport Costs And Circular Space," The Japanese Economic Review, Japanese Economic Association, vol. 59(4), pages 498-518, December.
    10. Takeshi Ebina & Toshihiro Matsumura & Daisuke Shimizu, 2009. "Mixed oligopoly and spatial agglomeration in quasi-linear city," Economics Bulletin, AccessEcon, vol. 29(4), pages 2722-2729.
    11. Andreea Cosnita-Langlais, 2011. "Cournot competition in spatial markets: a complementary result on complementarity," Economics Bulletin, AccessEcon, vol. 31(3), pages 2454-2467.
    12. Li, Changying, 2006. "Location choice in a mixed oligopoly," Economic Modelling, Elsevier, vol. 23(1), pages 131-141, January.
    13. Ching‐Chih Tseng & Wen‐Jung Liang & Kuang‐Cheng Andy Wang, 2010. "Spatial agglomeration with vertical differentiation," Papers in Regional Science, Wiley Blackwell, vol. 89(4), pages 841-858, November.
    14. Toshihiro Matsumura & Daisuke Shimizu, 2015. "Endogenous Flexibility In The Flexible Manufacturing System," Bulletin of Economic Research, Wiley Blackwell, vol. 67(1), pages 1-13, January.
    15. Stefano Colombo, 2016. "Location choices with a non-linear demand function," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 215-226, March.
    16. Gupta, Barnali & Lai, Fu-Chuan & Pal, Debashis & Sarkar, Jyotirmoy & Yu, Chia-Ming, 2004. "Where to locate in a circular city?," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 759-782, June.
    17. Takanori Ago & Hamid Hamoudi & Yassine Lefouili, 2017. "Firm location and monopolistic competition," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 211-219, March.
    18. repec:ebl:ecbull:v:4:y:2004:i:15:p:1-6 is not listed on IDEAS
    19. Stefano Colombo, 2012. "Collusion in two models of spatial competition with quantity-setting firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 45-69, February.
    20. Barnali Gupta, 2004. "Spatial Cournot competition in a circular city with transport cost differentials," Economics Bulletin, AccessEcon, vol. 4(15), pages 1-6.
    21. Toshihiro Matsumura & Daisuke Shimizu, 2009. "Equilibrium Location and Economic Welfare in Delivered Pricing Oligopoly," Economics Bulletin, AccessEcon, vol. 29(2), pages 760-768.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:anresc:v:64:y:2020:i:1:d:10.1007_s00168-019-00952-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.