COURNOT COMPETITION IN A TWO-DIMENSIONAL CIRCULAR CITY

In this paper we develop a Cournot competition model between two firms located in a two‐dimensional circular city. This city consists of a circumference and all the points in its interior for which movement between any two points can be made in a straight line. Firms have zero costs and market deman...

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Bibliographic Details
Published in:The Manchester school 2005-01, Vol.73 (1), p.40-49
Main Authors: MALDONADO, MARÍA ISABEL BERENGUER, VALVERDE, SANTIAGO CARBÓ, ESCALONA, MIGUEL ÁNGEL FORTES
Format: Article
Language:English
Subjects:
Cities
Competition
Economic models
Economic theory
Market
Studies
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Summary:In this paper we develop a Cournot competition model between two firms located in a two‐dimensional circular city. This city consists of a circumference and all the points in its interior for which movement between any two points can be made in a straight line. Firms have zero costs and market demand is symmetrically linear. We show that there exists a single state of equilibrium in which the firms agglomerate in the centre of the circle.
ISSN:1463-6786
1467-9957
DOI:10.1111/j.1467-9957.2005.00423.x