COURNOT COMPETITION IN A TWO‐DIMENSIONAL CIRCULAR CITY

María Isabel Berenguer Maldonado, Santiago Carbo Valverde and Miguel Ángel Fortes Escalona

Manchester School, 2005, vol. 73, issue 1, 40-49

Abstract: In this paper we develop a Cournot competition model between two firms located in a two‐dimensional circular city. This city consists of a circumference and all the points in its interior for which movement between any two points can be made in a straight line. Firms have zero costs and market demand is symmetrically linear. We show that there exists a single state of equilibrium in which the firms agglomerate in the centre of the circle.

Date: 2005
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