Spatial Cournot Competition

This chapter reviews the literature on spatial Cournot competition with endogenous firms’ locations in the past 30 years, which started from Hamilton et al. (Spatial Discrimination: Bertrand vs. Cournot in a Model of Location Choice. Regional Science and Urban Economics, 19, 87–102, 1989) and Anderson and Neven (Cournot Competition Yields Spatial Agglomeration. International Economic Review, 32, 793–808, 1991). Linear markets and circular markets are two main streams in the spatial Cournot models. Overall speaking, spatial Cournot models can capture the real-world regularity (agglomeration at the market center) observed by Harold Hotelling and escape from the undercutting trap in Hotelling (Stability in Competition. Economic Journal, 39, 41–57, 1929). Moreover, diverse location patterns are shown in circular markets.