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Location as an instrument for social welfare improvement in a spatial model of Cournot competition

Author

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  • Raquel Arévalo-Tomé
  • José-María Chamorro-Rivas

Abstract

Two-stage models are main frameworks in the analysis of oligopolistic competition. Literature has discussed some properties of such models when Cournot competition occurs in the second stage and assuming a non-spatial context. It finds that private and social optima are asymmetric. Using a spatial behavior with multiple marketplaces, the outcome is different. A social planner can use the location variable as an instrument for reallocating production from the equilibrium spatial pattern to the optimal outcome while maintaining the symmetry of the model.

Suggested Citation

  • Raquel Arévalo-Tomé & José-María Chamorro-Rivas, 2005. "Location as an instrument for social welfare improvement in a spatial model of Cournot competition," Working Papers 0501, Universidade de Vigo, Departamento de Economía Aplicada.
    • Handle: RePEc:vig:wpaper:0501
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    References listed on IDEAS

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    1. Gérard Gaudet & Stephen W. Salant, 1991. "Uniqueness of Cournot Equilibrium: New Results From Old Methods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 399-404.
    2. Bergstrom, Theodore C. & Varian, Hal R., 1985. "Two remarks on Cournot equilibria," Economics Letters, Elsevier, vol. 19(1), pages 5-8.
    3. Greg Shaffer & Stephen W. Salant, 1999. "Unequal Treatment of Identical Agents in Cournot Equilibrium," American Economic Review, American Economic Association, vol. 89(3), pages 585-604, June.
    4. Theodore C. Bergstrom & Hal R. Varian, 1985. "When Are Nash Equilibria Independent of the Distribution of Agents' Characteristics?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 715-718.
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    Cited by:

    1. Sun Chia-Hung, 2014. "Cournot and Bertrand Competition in a Model of Spatial Price Discrimination with Differentiated Products," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 251-272, January.
    2. Chia-Hung Sun & Fu-Chuan Lai, 2014. "Spatial price discrimination in a symmetric barbell model: Bertrand vs. Cournot," Papers in Regional Science, Wiley Blackwell, vol. 93(1), pages 141-158, March.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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