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Cournot competition in spatial markets : some complementary results on complementarity

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Abstract

We study location equilibria for Cournot oligopolies selling complementary goods. For a single-store triopoly, we prove that the circular market also yields partial diamentrical dispersion besides total agglomeration. We turn to multi-plant duopolies and in contrast to other contributions on the topic, we allow firms to sell more than one product. We confirm the intuition that total agglomeration of outlets is always an equilibrium, whatever the market shape. However, the circular case also exhibits intra-firm agglomeration and inter-firm equal distance dispersion. This is a pattern never before obtained, entirely due to the assumption of intra-firm product complementarity.

Suggested Citation

  • Andrea Cosnita, 2005. "Cournot competition in spatial markets : some complementary results on complementarity," Cahiers de la Maison des Sciences Economiques v05061, Université Panthéon-Sorbonne (Paris 1), revised Apr 2006.
  • Handle: RePEc:mse:wpsorb:v05061
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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. Chia-Ming Yu & Fu-Chuan Lai, 2003. "Cournot competition in spatial markets: Some further results," Economics of Governance, Springer, vol. 82(4), pages 569-580, November.
    3. Andreea Cosnita, 2005. "Horizontal mergers in the circular city: a note," Economics Bulletin, AccessEcon, vol. 12(7), pages 1-10.
    4. Kats, Amoz, 1995. "More on Hotelling's stability in competition," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 89-93, March.
    5. Pal, Debashis, 1998. "Does Cournot competition yield spatial agglomeration?," Economics Letters, Elsevier, vol. 60(1), pages 49-53, July.
    6. Pal, Debashis & Sarkar, Jyotirmoy, 2002. "Spatial competition among multi-store firms," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 163-190, February.
    7. Chamorro-Rivas, Jose-Maria, 2000. "Plant proliferation in a spatial model of Cournot competition," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 507-518, September.
    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.
    9. Shimizu, Daisuke, 2002. "Product differentiation in spatial Cournot markets," Economics Letters, Elsevier, vol. 76(3), pages 317-322, August.
    10. Matsushima, Noriaki, 2001. "Cournot competition and spatial agglomeration revisited," Economics Letters, Elsevier, vol. 73(2), pages 175-177, November.
    11. 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.
    12. repec:ebl:ecbull:v:12:y:2005:i:7:p:1-10 is not listed on IDEAS
    13. repec:ebl:ecbull:v:18:y:2003:i:1:p:1-9 is not listed on IDEAS
    14. 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.
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    More about this item

    Keywords

    Complementary products; multi-store competition; spatial Cournot model.;

    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
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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