Essays on Spatial Competition

• Main Authors: Chia-Hung Sun, 孫嘉宏
• Other Authors: Fu-Chuan Lai
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/83613508911442544153

博士 === 國立臺北大學 === 經濟學系 === 97 === This dissertation includes four essays on spatial competition under various market spaces and various competition strategies of firms. The title of Chapter 2 (first essay) is “Spatial Cournot Competition in a Circular City with Directional Delivery Constraints.” This chapter analyzes spatial Cournot competition in a circular city with a directional delivery constraint, which means that a firm can only deliver its product in one direction. It reveals that, contrary to the standard result, the unique location equilibrium involves duopoly firms agglomerating at the same location when they deliver products in different directions or when the direction decisions are made endogenously. We point out that spatial agglomeration emerges from a central point of view for a firm in a circular city, showing relaxing quantity competition through cost differentiation. The title of Chapter 3 (second essay) is “A General Analysis of Spatial Cournot Competition and Economic Welfare in Spatially Separated Markets.” This chapter investigates welfare properties in a location-quantity game for spatially separated markets with general demand functions. It is found that maximal location differentiation is not only socially optimal, but it is also the only possible location equilibrium. For a policy implication, this implies that there is no need for government intervention by relocating the firms. The cost asymmetry between firms resulting from location differentiation is both socially and individually preferred in spatially separated markets. The title of Chapter 4 (third essay) is “A Revisit to Quality Variations and Maximal Variety Differentiation.” Economides (1989) claims to have shown that for a sequential game of variety (or, say, location) choice and subsequent quality and price choice in a Hotelling model with linear transportation costs, there exist only maximal variety differentiation and minimal quality differentiation equilibrium. The primary purpose of this chapter is to show that, in a rigorous manner, no location equilibrium exists in this model. The key factor of the non-existence problem is because no best response of the location choice exists whenever a firm’s opponent locates at the edge of the market in Economides’ (1989) model. This chapter also provides a slightly modified version based on the functional form of the transportation cost and the game structure to overcome the non-existence problem. The title of Chapter 5 (fourth essay) is “Sequential Location in a Discrete Directional Market with Three or More Players”. This chapter analyzes a three-player sequential entry game in a discrete directional market. It is shown that there are multiple equilibrium outcomes, and any player may take advantage in this game due to the indifference problem of the players. However, if we utilize some further refinements such as the validated equilibrium introduced by Spagat (1992) or lexicographic preference relation players with payoff ranking being the second determinants, the results present that the later the players enter a directional market, the greater the benefits they will receive. This chapter ends with an extension of a general number of players.