Production-location decision and free entry oligopoly (vol 33, pg 252, 1992)

This paper shows that there is no interior solution in Mai-Hwang's 1992 oligopolistic location model with free entry when the production function exhibits constant or decreasing returns to scale. The comparative static results of the impact of a demand change on the location decision only apply to the case where the production function exhibits increasing returns to scale. It re-examines the impact of a demand change on the location decision of an oligopolistic firm and corrects the propositions derived by [C.C. Mai, H. Hwang, Production-location decision and free entry oligopoly, Journal of Urban Economics 33 (1992) 252-271. Reprinted in: M.L. Greenhut, G. Norman (Eds.), The Economics of Location, vol. 1: Location Theory, Edward Elgar, Aldershot, 1995]. (C) 2006 Elsevier Inc. All rights reserved.