SPATIAL COMPETITION OF FIRMS IN A 2-DIMENSIONAL BOUNDED MARKET

We reformulate spatial competition of firms selling a homogeneous good in a two-dimensional bounded market. Under the assumptions of (1) uniform pricing of the good sold by firms; (2) uniformly distributed and price-inelastic consumer demand; and (3) costless relocation, we investigate the relationship which holds between the shape of a two-dimensional market and the existence and configuration of an equilibrium. Through analytical and simulational study, we find that in fact there exists a strict relationship between them.