Product differentiation in a spatial Cournot model with asymmetric demand

This paper considers a spatial discrimination Cournot model with asymmetric demand. We use the geographical interpretation of the linear market and introduce differentiated products. We analyze a location-quantity game and show that agglomeration or dispersed locations may arise, depending on parameter combinations. The degree of differentiation plays an important role in location choice if the demand is asymmetric. The higher the degree of differentiation between the products the more likely is agglomeration. Only cases with a low degree of differentiation and a relatively low difference in market size leads to the absence of agglomeration in the larger market.