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

Raquel Arévalo-Tomé and José María Chamorro-Rivas
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Raquel Arévalo-Tomé: Universidad de Vigo
José María Chamorro-Rivas: Universidad de Vigo

Investigaciones Economicas, 2006, vol. 30, issue 1, pages 117-136

Abstract: Two-stage models are the 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 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.

Keywords: Spatial competition; Cournot; welfare (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Date: 2006

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