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Two-dimensional spatial Cournot competition with hyperbolic demand

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  • Takanori Ago

    (Senshu University)

Abstract

We analyze location decisions in a two-dimensional space in spatial Cournot competition based on Colombo’s (Pap Reg Sci 95:215–226, 2016) one-dimensional model. We adopt hyperbolic demand to generate centrifugal forces, and assume iceberg transport costs for analytical tractability. Consequently, we find that the agglomerated (dispersed) equilibrium has a tendency for low (high) transport costs, which is similar to Colombo (2016). We also show significant similarities and subtle differences with the two-dimensional Bertrand model by Tabuchi (Reg Sci Urban Econ 24:207–227, 1994), where firms differentiate only in one dimension in equilibrium.

Suggested Citation

  • Takanori Ago, 2025. "Two-dimensional spatial Cournot competition with hyperbolic demand," Letters in Spatial and Resource Sciences, Springer, vol. 18(1), pages 1-16, December.
    • Handle: RePEc:spr:lsprsc:v:18:y:2025:i:1:d:10.1007_s12076-025-00415-0
    DOI: 10.1007/s12076-025-00415-0
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    References listed on IDEAS

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    1. Hamilton, Jonathan H. & Thisse, Jacques-Francois & Weskamp, Anita, 1989. "Spatial discrimination : Bertrand vs. Cournot in a model of location choice," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 87-102, February.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    3. Andreea Cosnita-Langlais & Eric Langlais, 2024. "Cournot Competition on the Hotelling Line Yields at Most Three Varieties," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(3), pages 669-704, November.
    4. Ricardo Biscaia & Isabel Mota, 2013. "Models of spatial competition: A critical review," Papers in Regional Science, Wiley Blackwell, vol. 92(4), pages 851-871, November.
    5. Alessandra Chirco & Marcella Scrimitore & Corrado Benassi, 2007. "Spatial Discrimination with Quantity Competition and High Transportation Costs: a Note," Economics Bulletin, AccessEcon, vol. 12(1), pages 1-7.
    6. 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.
    7. Tabuchi, Takatoshi, 1994. "Two-stage two-dimensional spatial competition between two firms," Regional Science and Urban Economics, Elsevier, vol. 24(2), pages 207-227, April.
    8. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
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    Keywords

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    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
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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