Localization of Activities: an Endogenous Geographical Choice

Antoine Soubeyran () and Shlomo Weber ()

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: This paper considers a model of oligopolistic competition and locational choice that incorporates the notion of regional industrial systems. Firms play a non cooperative game where the strategy set of firms is given by a set of existing industrial districts. Each firm is distinguished by its "stand alone" district-dependant marginal cost. However, if other firms locate in the same district, its stand alone cost is reduced by a factor that depends on the number of firms in the district. We show that the location game yields a Nash equilibrium in pure strategies.

Keywords: LOCATION OF INDUSTRY; OLIGOPOLIES; EXTERNALITIES; GAME THEORY (search for similar items in EconPapers)
JEL-codes: C62 L13 R1 (search for similar items in EconPapers)
Date: Written

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