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Sequential location under one-sided demand uncertainty

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  • Bonein, Aurélie
  • Turolla, Stéphane

Abstract

In entering a new market, firms face demand uncertainty. We depart from the usual Hotelling duopoly model with sequential entry. We allow firms to locate outside of the city and assume that market conditions are common knowledge. We then introduce one-sided demand uncertainty. We find that demand uncertainty can be seen as a differentiation force when faced by the first entrant and as an agglomeration force when faced by the second entrant. Finally, the second firm's imperfect information implies higher welfare losses.

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Bibliographic Info

Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 63 (2009)
Issue (Month): 3 (September)
Pages: 145-159

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Handle: RePEc:eee:reecon:v:63:y:2009:i:3:p:145-159

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Web page: http://www.elsevier.com/locate/inca/622941

Related research

Keywords: Location Hotelling Sequential duopoly game Product differentiation Demand uncertainty;

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Citations

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Cited by:
  1. Jianhu Zhang & Changying Li, 2013. "Endogenous timing in a mixed oligopoly under demand uncertainty," Journal of Economics, Springer, vol. 108(3), pages 273-289, April.
  2. Aurélie Bonein & Stéphane Turolla, 2007. "Sequential Location under one-sided Demand Uncertainty," Working Papers 07-12, LAMETA, Universtiy of Montpellier, revised Nov 2007.
  3. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.

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