On the existence of spatial monopolies under free entry

Sébastien Steinmetz () and Yves Zenou
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Sébastien Steinmetz: Laboratoire d'Econométrie de l'Ecole Polytechnique, 1 rue Descartes, 75005 Paris, France

No 1999001, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In a model of horizontal product differentiation, we show that local monopolies may exist under free entry when capital is perfectly mobile. In contrast both with the situation of restricted entry and with the zero-profit approach to free entry outcomes of Salop (1979), the unit profit rate of incumbent monopolists is positive and bounded above in equilibrium. The upper bound we find decreases with the size of unserved market areas and with the number of incumbent monopolists.

Keywords: horizontal product differentiation; entry; local monopolies; spatial contestability (search for similar items in EconPapers)
JEL-codes: D42 D43 L12 L13 R32 (search for similar items in EconPapers)
Date: 1999-01-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: On the Existence of Spatial Monopolies Under Free Entry (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1999001

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