CLUSTERING AND DISPERSION OF DUOPOLISTS IN A LINEAR MARKET

The locations that two sellers will choose in a linear market has long been of interest. It is well accepted that firms will tend to cluster in the center of the market as long as demand for the product is inel astic and the market area is bounded. It has also been. stated that cl ustering is less strong as demand becomes more elastic, but questions of when this dispersion occurs and what affects it remain to be addres sed. This paper further explores clustering in spatial duopoly as elas tic demand is allowed. Results indicate that the clustering behavior o f sellers is rebated to the price of the product they sell, the cost t o the consumer of acquiring the product, and the elasticity of demand. Locations of sellers in a linear market will lie between the median l ocation and the quartiles as these parameters vary.