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Product differentiation in a spatial Cournot model with asymmetric demand

Author

Listed:
  • Kai Andree

    (University of Potsdam)

  • Juljana Calaki

    (University of Bonn)

Abstract

This paper considers a spatial discrimination Cournot model with asymmetric demand. We use the geographical interpretation of the linear market and introduce differentiated products. We analyze a location-quantity game and show that agglomeration or dispersed locations may arise, depending on parameter combinations. The degree of differentiation plays an important role in location choice if the demand is asymmetric. The higher the degree of differentiation between the products the more likely is agglomeration. Only cases with a low degree of differentiation and a relatively low difference in market size leads to the absence of agglomeration in the larger market.

Suggested Citation

  • Kai Andree & Juljana Calaki, 2011. "Product differentiation in a spatial Cournot model with asymmetric demand," Economics Bulletin, AccessEcon, vol. 31(2), pages 1125-1130.
    • Handle: RePEc:ebl:ecbull:eb-11-00074
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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I2-P105.pdf
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    References listed on IDEAS

    as
    1. 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.
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    Cited by:

    1. Kai Andree, 2013. "Collusion in Spatially Separated Markets with Quantity Competition," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 309-318, September.
    2. Torbenko, A., 2015. "Linear City Models: Overview and Typology," Journal of the New Economic Association, New Economic Association, vol. 25(1), pages 12-38.
    3. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial price discrimination and location choice with labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 103-119, January.

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    More about this item

    Keywords

    Spatial Cournot competition; Agglomeration; Asymmetric demand structure; Product differentiation;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • D0 - Microeconomics - - General

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