The circular road revisited: Uniqueness and supermodularity

The model of the circular road has proved to be a popular model of oligopolistic interaction, yet its theoretical properties are not fully explored. In this paper I extend the uniqueness result of price equilibrium in the circular road with equidistant locations from quadratic transportation costs, to a class of convex power transportation costs, i.e. I show uniqueness in oligopoly for a class of utility functions of the consumers. I show that the associated game is supermodular and dominance solvable. The paper also discusses possible extensions and limitations of the model.