Cournot and Bertrand in shipping models with circular markets*

Toshihiro Matsumura and Daisuke Shimizu

Papers in Regional Science, 2006, vol. 85, issue 4, 585-598

Abstract: Abstract. We investigate two shipping (delivered pricing) duopoly models with circular markets, Cournot and Bertrand. In the Cournot model, maximal distance between two firms becomes the unique equilibrium outcome if transport cost is increasing with distance, irrespective of whether the transport cost function is convex or concave. This result is robust in the sense that cost heterogeneity between two firms does not change the result. In contrast to the Cournot model, this location pattern can fail to be an equilibrium in the Bertrand model.

Date: 2006
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Citations: View citations in EconPapers (14)

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https://doi.org/10.1111/j.1435-5957.2006.00098.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:85:y:2006:i:4:p:585-598

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