Spatial competition among multi-store firms

Abstract

The paper analyzes spatial Cournot competition among multi-store firms. It demonstrates that the complex problem of determining equilibrium store locations for competing multi-store firms can be approximated by a simple one, in which each firm behaves as a multi-store monopolist in choosing its store locations. A firm’s equilibrium store locations often coincide with its monopoly locations, and in general, converge to its monopoly locations as the demand grows larger. When the firms have an equal number of stores, the stores belonging to competing firms agglomerate at discrete points that coincide with each firm’s monopoly store locations.