Do Firms Compete When Demand is Low? A Model of Spatial Differentiation
In a spatial competition model, changes in firms’ competitive behaviour may occur when the hypothesis that individual gross surplus is positive in equilibrium is relaxed. We prove that there exists a region of the relevant parameter where firms’ behaviour mimics collusion, while in another range they find it optimal to isolate from each other and behave monopolistically.
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- Beath,John & Katsoulacos,Yannis, 1991.
"The Economic Theory of Product Differentiation,"
Cambridge University Press, number 9780521335263, December.
- d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979.
"On Hotelling's "Stability in Competition","
Econometric Society, vol. 47(5), pages 1145-50, September.
- Stiglitz, Joseph E, 1984. "Price Rigidities and Market Structure," American Economic Review, American Economic Association, vol. 74(2), pages 350-55, May.
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