chapter  2
7 Pages

Spatial Monopoly

In a pathbreaking paper, Hotelling [50] provided the framework for the basic model of spatial competition. The present article rests upon this work, and aims to provide an integrated overview of the contributions rooted in the same tradition. It is organized as follows. After reviewing the main results obtained in the theory of spatial monopoly (Section 2), we propose a unified framework describing the basic ingredients of the process of competition in a dispersed market (Section 3). Then we investigate the market solution for a given number of firms (Section 4) and in the case of entry of new firms (Section 5). Finally, we briefly discuss some possible reformulations of the basic model and present some concluding remarks (Section 6).