Year of Graduation
Modelling Some Details of Imperfect Competition
Double degree programme in Economics of the NRU HSE and the University of London
This paper analyses the optimal behavior of oligopolistically competing firms by extending the Hotelling linear city setup to a two-dimensional circular plane with several firms and analyzing how changes in exogenous variables affect the existence and nature of equilibrium. First, the paper shows that due to complexity of the model a closed form solution cannot be derived even for a vastly simplified setup. Then, it introduces and validates an iterative numerical simulation model which allows to find the equilibria under multiple sets of exogenous variables. The paper provides robust empirical evidence that the equilibria tend to be symmetric and that its existence requires transportation costs to be high enough and consumers locations to be diversified enough. It also shows some general patterns of the equilibria and discusses some selected cases in more details.