Price and location equilibria in a circular market: a pure vs a mixed duopsony with a co-operative

Panos Fousekis and Dimitrios Panagiotou
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Panos Fousekis: Department of Economics, Aristotle University of Thessaloniki, Thessaloniki, Greece
Dimitrios Panagiotou: Department of Economics, University of Ioannina, Ioannina, Greece

Agricultural Economics, 2013, vol. 59, issue 8, 341-347

Abstract: The objective of the present paper is to analyze the location-price competition in circular markets where the power lies with the buyers. To this end, it considers two alternative market structures. Namely, the pure ones, where the buyers of a primary commodity are private firms, and mixed ones, where a private firm competes against a producer's co-operative. According to the results, the pure-strategy location equilibrium in both cases involves a distance between the two players larger or equal to 1/4. Nevertheless, the equilibriums are qualitatively different. In the pure duopsony, a large distance is required to prevent a price war while in the mixed duopsony, the private firm tries to stay away from the co-op in order to ensure a strictly positive profit.

Keywords: circular spatial competition; market power; mixed oligopsony (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:59:y:2013:i:8:id:129-2012-agricecon

DOI: 10.17221/129/2012-AGRICECON

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