英文摘要 |
This paper analyzes the relationship between market size and location choice of two firms engaging in quantity competition with differentiated products. Under the model of a linear city with uniformly distributed consumers, we prove that there exists a minimum market size for firms to agglomerate in the market center. On the contrary, the separation equilibrium will occur when market size is below the threshold. Furthermore, we show that the conventional result of central agglomeration equilibrium is indeed a special case of ours, due to its assumption of higher market size than the threshold. We also prove that under separation equilibrium, the smaller the market size and/or the higher the degree of product homogeneity, the larger the separation distance between firms will be. |