Spatial competition,concentration and welfare

This paper gives the general conditions under which the firm's f.o.b. mill price may rise or fall due to spatial separation of buyers and/or spatial entry of rival firms. Several theorems are proposed concerning the fundamental mechanism underlying certain paradoxical implications of two orthodox spatial competition models. A third alternative model of competition set forth elsewhere is reexamined, and is shown to generate the largest market areas for individual firms, the lowest product prices, and the greatest industry supply — the greatest consumer welfare.