Product Differentiation and Location Choice in a Circular City*

Barnali Gupta, Debashis Pal () and Jyotirmoy Sarkar

Journal of Regional Science, 2006, vol. 46, issue 2, 313-331

Abstract: Abstract. The paper analyzes spatial competition among firms that sell substitute and/or complementary products. The firms first choose locations on the perimeter of a circular city and then compete in quantities (à la Cournot). Both linear and convex (quadratic) transport costs are considered. In general, multiple location equilibria are encountered. Complete agglomeration, partial agglomeration, and complete dispersion are possible. Convex (quadratic) transport cost substantially shrinks the set of equilibria obtained under linear transport cost. In general, the results obtained for a larger number of firms selling complementary products are strikingly different from those obtained under a duopoly.

Date: 2006
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