An Introductory Note on the Locational Competition of Firms in a Bounded Two-Dimensional Market

The Possibilities of Equilibrium under Uniform Pricing

Abstract

This note reformulates the model of “icecream-venders' competition” in a bounded two-dimensional market. Under the behavioral assumptions of (i) identical price setting, (ii) myopic profit maximization, and (iii) free relocation, I show several possibilities of spatial equilibrium. Moreover, through the computer-simulating analyses, I illustrate that the equilibrium configurations of firms are substantially affected by (i) the shape of the two-dimensional market and (ii) the number of firms. The implications of thus derived equilibria are also discussed.