Cournot Competition Yields Spatial Agglomeration

Simon Anderson and Damien Neven

International Economic Review, 1991, vol. 32, issue 4, 793-808

Abstract: Most theoretical models of spatial competition show a strong tendency toward spatial dispersion of firms, yet common observations suggest that firms tend to agglomerate. In this paper, the authors show that competition between Cournot-type oligopolists that discriminate over space leads to spatial agglomeration. One implication is that firms do not (necessarily) earn supernormal profits at the free-entry equilibrium. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1991
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