We derive the closed-form solution characterizing the equilibrium in a circular-city model with competing firms of heterogeneous production costs. Tractability issues in this setting are well known and have not been resolved in prior work. In this paper, the equilibrium solution illustrates effects of production costs on firms’ strategic decisions, their aggregate profit, and consumer surplus.
Circular-city model, cost heterogeneity, game theory
Computer Sciences | Management Information Systems
Information Systems and Management
Operations Research Letters
LIN, Mei and WU, Ruhai.
Production Cost Heterogeneity in a Circular-City Model. (2015). Operations Research Letters. 43, (4), 401-404. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/1962
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.