Where to locate in a circular city?

We study the location choices by Cournot oligopolists in a circular market, where consumers are located uniformly along the circumference. We analyze the subgame perfect Nash equilibria (SPNE) of a two-stage location-quantity game. We demonstrate that the equidistant location pattern is only one of the many equilibrium location patterns that arise in a circular market. Nonequidistant, multiple or a continuum of location equilibria may also arise. Both spatial agglomeration and dispersion, or a combination of agglomeration and dispersion may occur in equilibrium. In the case of infinitely many location equilibria, we establish the welfare equivalence of the equilibrium location patterns. (C) 2004 Elsevier B.V. All rights reserved.