Spatial duopoly with triangular markets

This article develops a duopoly model in which consumers are uniformly distributed along three sides (streets) of a triangular park and each consumer walks across the park in the shortest way to the lowest-price firm to buy one unit of a product. Two important findings emerge from our analysis. First, both firms choose location adjustment rather than price-cutting as a competition strategy to pursue their maximum profit. Second, asymmetric triangular markets provide more advantage to the firms than do symmetric ones. The intuition of this result is that each firm's monopoly power increases as the degree of asymmetry increases; firms can therefore raise their product prices in order to increase their profit. Copyright RSAI 2005.