Geographical Separation of Oligopolists Can Be Very Competitive*

A given number of single-product oligopolists locate in one of two separate market-places, which consumers access at a cost. Firms set prices and the CES consumers choose purchases at one or both market-places. Firm agglomeration in one market-place produces positive profits because of product differentiation. But under various assumptions, geographical separation of firms produces prices analogous to homogeneous product Bertrand, and is “very competitive”, the reverse of textbook Hotelling. Agglomeration equilibria ensue, in a way that is dual to existing arguments for “head-to-head” competition in product lines. Quantity competition and search model alternatives are also investigated. JEL classification: D43, L13, R3