PRICE UNCERTAINTY AND PRODUCTION-LOCATION DECISIONS UNDER FREE ENTRY OLIGOPOLY

This paper departs from earlier work on location theory under uncertai nty by considering an oligopoly case where the symmetric Cournot-Nash equilibrium of imperfectly competitive and identical firms are examine d. It will be shown that once a Cournot competitive equilibrium is int roduced, the demand function plays a central role in the choice of loc ation, and the effects of changes in fixed costs, mean product price a nd price variability on the firm's optimum location and output are ind ependent of absolute and/or relative risk aversion. These striking res ults are in sharp contrast with the well-known results obtained in pre vious contributions to the location literature.