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Strategic Clustering and Competition by Alcohol Retailers: An Emperical Anlysis of Entry and Location Decisions

Author

Listed:
  • Yi Deng

    (Department of Economics, University of South Florida)

  • Gabriel Picone

    (Department of Economics, University of South Florida)

Abstract

We develop and estimate a spatial game-theoretic model of entry and location choices to examine firms� strategic clustering decisions. The model identifies two contradictory effects that determine firms� geographical location choices: a competition effect and a clustering effect. We also separate firms� strategic clustering incentives from the observed clustering behavior due to exogenous factors such as population and topographic desirability or constraints. In particular, we examine two closely related industries that share similar location limitations but have different strategic incentives to cluster, jointly estimate the Bayesian Nash equilibrium of a two-industry entry and location game, and quantify the strategic clustering incentives.

Suggested Citation

  • Yi Deng & Gabriel Picone, 2013. "Strategic Clustering and Competition by Alcohol Retailers: An Emperical Anlysis of Entry and Location Decisions," Working Papers 1013, University of South Florida, Department of Economics.
    • Handle: RePEc:usf:wpaper:1013
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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