Mixed oligopoly and spatial agglomeration

Noriaki Matsushima and Toshihiro Matsumura

Canadian Journal of Economics, 2003, vol. 36, issue 1, pages 62-87

Abstract: We investigate a mixed market where a state-owned welfare-maximizing public firm competes against profit-maximizing private firms. We use a circular city model with quantity-setting competition. In contrast to a pure market case discussed by Pal (1998a), spatial agglomeration of private firms always appears in equilibrium. All private firms locate at the same point, and the public firm locates at the opposite side. We also find that this equilibrium pattern of the location is second best provided that output of each private firm cannot be controlled by the social planner.

JEL-codes: H42 L13 (search for similar items in EconPapers)
Date: 2003
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