Spatial competition with concave transport costs

Abstract

We study the location-then-price game played by two firms in a circular market when consumers face non-linear transport costs. We show that for any convex transport cost function there exists a concave one such that the location-then-price games induced by these functions are strategically equivalent. Further, we provide a sufficient condition to guarantee that a similar equivalence result holds under oligopolistic competition among equidistant firms.