Spatial competition and equilibrium in a circular market
The paper presents an analysis of spatial competition between two firms in a circular market. It is shown that the existence problem of a Bertrand-Nash- Equilibrium exists for the circular market in the same way as for the linear and bounded market. This is demonstrated by directly studying the reaction functions of the competing producers and without referring to merely technical fixed point arguments. The existence problem is solved by adding a move structure to the game, regarding market entry as sequential and taking place in historical time.
|Date of creation:||1993|
|Date of revision:|
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- d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979.
"On Hotelling's "Stability in Competition","
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- Osborne, Martin J & Pitchik, Carolyn, 1987.
"Equilibrium in Hotelling's Model of Spatial Competition,"
Econometric Society, vol. 55(4), pages 911-22, July.
- Martin J Osborne & Carolyn Pitchik, 1985. "Equilibrium in Hotelling's Model of Spatial Competition," Department of Economics Working Papers 1985-02, McMaster University.
- Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
- Hay, D A, 1976. "Sequential Entry and Entry-Deterring Strategies in Spatial Competition," Oxford Economic Papers, Oxford University Press, vol. 28(2), pages 240-57, July.
- Eaton, B Curtis & Lipsey, Richard G, 1978. "Freedom of Entry and the Existence of Pure Profit," Economic Journal, Royal Economic Society, vol. 88(351), pages 455-69, September.
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