Location as an instrument for social welfare improvement in a spatial model of Cournot competition

Raquel Arévalo and José-María Chamorro-Rivas

No 501, Working Papers from Universidade de Vigo, Departamento de Economía Aplicada

Abstract: Two-stage models are main frameworks in the analysis of oligopolistic competition. Literature has discussed some properties of such models when Cournot competition occurs in the second stage and assuming a non-spatial context. It finds that private and social optima are asymmetric. Using a spatial behavior with multiple marketplaces, the outcome is different. A social planner can use the location variable as an instrument for reallocating production from the equilibrium spatial pattern to the optimal outcome while maintaining the symmetry of the model.

Pages: 26 pages
Date: 2005-01
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Journal Article: Location as an instrument for social welfare improvement in a spatial model of cournot competition (2006)
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