Factor market oligopsony and the location decision of free entry oligopoly

Chiung-I Hwang () and Yeung-Nan Shieh ()
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Chiung-I Hwang: Department of Economics, San Jose State University

Economics Bulletin, 2007, vol. 18, issue 6, 1-7

Abstract: This paper examines the impact of oligopsony power on the location decision of undifferentiated oligopolistic firms with free entry. In the case where the distance of an oligopolistic firm from the output market is held constant, it shows that the optimum location moves away from the oligopsonistic input market if the demand function and the labor supply function are linear. In the case where the distance of an oligopolistic firm from the output market is a decision variable, it shows that the optimum location may not move toward the output market as demand increases if the demand function is convex. These results are significantly different from the conventional results based on the perfectly competitive factor market. It indicates that the presence of oligopsony power has important influence on the location decision of oligopolistic firms.

Keywords: Free; entry; oligopoly (search for similar items in EconPapers)
JEL-codes: D4 R3 (search for similar items in EconPapers)
Date: 2007-09-12
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Citations: View citations in EconPapers (1)

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