Location equilibria in a mixed duopsony with a cooperative

Panos Fousekis

Australian Journal of Agricultural and Resource Economics, 2015, vol. 59, issue 4, 518-532

Abstract: type="main" xml:id="ajar12101-abs-0001">

This work analyses a two-stage price–location game between a profit maximising firm and a primary producers' cooperative. According to the results, the location equilibria are not fixed but depend on the intrinsic competitiveness of the spatial market. As the intrinsic competitiveness rises, the cooperative tends to be located closer to the middle point of the market. The limited differentiation in location entails an efficiency loss which is nevertheless smaller than that associated with the competition of two profit maximising firms (pure duopsony) on exactly the same spatial market. The superiority of a mixed duopsony lies in the fact that the resulting equilibrium locations entail lower total transportation cost relative to those of a pure duopsony.

Date: 2015
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