A Dissenting View of Duopoly and Spatial Competition

The process of competitive product-differentiation has a threefold foundation. A firm in aspires to maximum profits by seeking an efficient combination of three economic variables: adjustments over space, and changes in both quality and price of product. Unlike price analysis, however, the theory of location or of quality under conditions of imperfect has never been a cause celbre.2 Significantly, too, over the years economists have suffered a growing tendency to regard the concepts of price competition and as synonymous. As a result, the term spatial competition is gradually disappearing from our vocabulary, though sporadically one still encounters it in the classroom and in print. But if this anomaly persists, an undesirable imbalance in microeconomic theory may become entrenched. A change in emphasis, therefore, is mandatory. Accordingly, my primary concern in this essay is to stimulate thought and discussion on so deserving a topic, chiefly by presenting the reader with a fresh pattern of analysis. The new analytical apparatus, leading to some interesting conclusions, is introduced below in a manner also suitable for the study of in quality. We open the discussion with a quotation from Professor Chamberlin's summary endorsemelnt of the prevailing views on spatial between two sellers. The reference is a convenient one. It contains both a clear statement of, and a typically faithful attachment to, a veteran thesis, in turn the principal target against which this article is directed: