A computational procedure for determination of oligopolistic spatial price equilibrium

The primary purpose of this paper is to develop a computational procedure for finding the Cournot equilibrium for a case in which many firms located at different points in space compete in many different markets located at different points in space. The model investigated here allows for the fact that not all firms sell to all regions. The algorithm is first developed under the assumptions (a) that the inverse demand function in each market is convex, and (b) that production costs of each firm are composed of a fixed cost and a constant marginal cost. It is shown that the proposed method with the convex combination algorithm is applicable to a spatial pricing model with variable marginal-cost functions.An earlier version of this paper was presented at the 11th Pacific Regional Science Conference, Singapore, July 1989.