Horizontal mergers in the circular city: a note

Two-firm horizontal Cournot mergers give rise to multi-plant firms in spatial markets. We study location equilibria on the circle for competition between a two-store merged entity and one then two single-store competitors. Several results turn up. First of all, we get equilibrium location patterns that could not have been obtained on the segment. Secondly, we investigate the profitability of such mergers and find that they turn out to be unprofitable much earlier.