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Spatial Cournot Oligopoly with Vertical Linkages

Author

Listed:
  • André Rocha
  • José Pedro Pontes

Abstract

This paper examines the equilibrium of location of N vertically-linked firms. In a spatial economy composed of two regions, a monopolist firm supplies an input to N consumer goods firms that compete in quantities. It was concluded that, when there are increases in the transport cost of the input, downstream firms prefer to agglomerate in the region where the upstream firm is located, in order to obtain savings in the production cost. On the other hand, increases in the general transport cost or in the number of downstream firms lead to a dispersion of these firms, in order to reduce competition and locate closer to the final consumer.

Suggested Citation

  • André Rocha & José Pedro Pontes, 2005. "Spatial Cournot Oligopoly with Vertical Linkages," Working Papers Department of Economics 2005/11, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp112005
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    File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp112005.pdf
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    References listed on IDEAS

    as
    1. Fujita, Masahisa & Hamaguchi, Nobuaki, 2001. "Intermediate goods and the spatial structure of an economy," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 79-109, February.
    2. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9781107001411, March.
    3. Mayer, Thierry, 2000. "Spatial Cournot competition and heterogeneous production costs across locations," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 325-352, May.
    4. Mary Amiti, 1998. "Regional Specialisation and Technological Leapfrogging," Working Papers 1998.14, School of Economics, La Trobe University.
    5. José Pontes, 2005. "Agglomeration in a vertically-related oligopoly," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 4(2), pages 157-169, August.
    6. Paul Belleflamme & Eric Toulemonde, 2003. "Product differentiation in successive vertical oligopolies," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 523-545, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Agglomeration; Intermediate Goods; Spatial Oligopoly.;

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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