Do Firms Compete When Demand is Low? A Model of Spatial Differentiation

Alessandra Chirco () and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In a spatial competition model, changes in firms competitive behaviour may occur when the hypothesis that individual gross surplus is positive in equilibrium is relaxed. We prove that there exists a region of the relevant parameter where firms behaviour mimics collusion, while in another range they find it optimal to isolate from each other and behave monopolistically.

Date: 1994-11
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:210

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