This paper investigates spatial Cournot competition in a circular city, where the maximal service range of a vehicle is less than half of the perimeter, and a firm needs to initiate more than two dispatches to serve the whole market. We examine a multi‐stage game of location and transportation mode choices, and the subsequent quantity competition between duopoly firms. The findings reveal that non‐maximum dispersion is the unique location equilibrium when duopoly firms deliver products in different transportation modes or when the transportation mode decisions are made endogenously and the fixed cost of a transportation instrument is relatively high.