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Abstract
Spatially dispersed production and processing, endemic for most agricultural or renewable
resource markets, causes oligopsonistic competition. The possibility and use
of spatial price discrimination in these markets is well documented. It is also well
known that the location of processors relative to competitors crucially affects the intensity
of competition. However, insights regarding the relation between spatial price
discrimination and the spatial differentiation of firms are barely present because the
simultaneous investigation of these issues is often intractable analytically. We use computational
economics to study these problems under a general theoretical framework.
For instance, we show whether and under which conditions firms choose to differentiate
their locations and/or price strategies. Results are consistent with observations in
agricultural markets.