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Multi-store competition: Market segmentation or interlacing?

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  • Janssen, Maarten C.W.
  • Karamychev, Vladimir A.
  • van Reeven, Peran

Abstract

This paper develops a model for multi-store competition between firms. Using thefact that different firms have different outlets and produce horizontally differentiated goods, we obtain a pure strategy equilibrium where firms choose a different location for each outlet and firms' locations are interlaced. Moreover, generically, the subgame perfect equilibrium isunique and when the firms have an equal number of outlets, prices are independent of the number of outlets.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 35 (2005)
Issue (Month): 6 (November)
Pages: 700-714

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Handle: RePEc:eee:regeco:v:35:y:2005:i:6:p:700-714

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  1. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  2. Victor Ginsburgh & André De Palma & Yorgo Papageorgiou & Jacques-François Thisse, 1985. "The principle of minimum differentiation holds under sufficient heterogeneity," ULB Institutional Repository 2013/1759, ULB -- Universite Libre de Bruxelles.
  3. IRMEN, Andreas & THISSE, Jacques-Francois, 1997. "Competition in multi-characteristics spaces: hotelling was almost right," CORE Discussion Papers 1997053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. James Brander & Jonathan Eaton, 1982. "Product Line Rivalry," Working Papers 519, Queen's University, Department of Economics.
  5. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September.
  6. Tore Nilssen & Lars Sørgard, 1998. "Time Schedule and Program Profile: TV News in Norway and Denmark," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 209-235, 06.
  7. Nilssen, Tore, 1997. "Sequential location when transportation costs are asymmetric," Economics Letters, Elsevier, vol. 54(2), pages 191-201, February.
  8. Lai, Fu-Chuan, 2001. "Sequential locations in directional markets," Regional Science and Urban Economics, Elsevier, vol. 31(5), pages 535-546, September.
  9. Tabuchi, Takatoshi, 1994. "Two-stage two-dimensional spatial competition between two firms," Regional Science and Urban Economics, Elsevier, vol. 24(2), pages 207-227, April.
  10. Pal, Debashis & Sarkar, Jyotirmoy, 2002. "Spatial competition among multi-store firms," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 163-190, February.
  11. Martinez-Giralt, Xavier & Neven, Damien J, 1988. "Can Price Competition Dominate Market Segmentation?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(4), pages 431-42, June.
  12. Salvanes, Kjell G. & Steen, Frode & Sorgard, Lars, 2005. "Hotelling in the air? Flight departures in Norway," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 193-213, March.
  13. Cancian, Maria & Bills, Angela & Bergstrom, Theodore, 1995. "Hotelling Location Problems with Directional Constraints: An Application to Television News Scheduling," Journal of Industrial Economics, Wiley Blackwell, vol. 43(1), pages 121-24, March.
  14. Klemperer, Paul, 1992. "Equilibrium Product Lines: Competing Head-to-Head May Be Less Competitive," American Economic Review, American Economic Association, vol. 82(4), pages 740-55, September.
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Cited by:
  1. Hammoudi Abdelhakim & Giraud-héraud Eric, 2009. "On the Existence and uniqueness of Price Equilibrium with Multi-Store Firms," Economics Bulletin, AccessEcon, vol. 29(2), pages 873-882.
  2. Gu, Yiquan & Wenzel, Tobias, 2012. "Price-dependent demand in spatial models," DICE Discussion Papers 43, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  3. Shin-Kun Peng & Takatoshi Tabuchi, 2005. "Spatial Competition in Variety and Number of Stores," CIRJE F-Series CIRJE-F-360, CIRJE, Faculty of Economics, University of Tokyo.
  4. Vladimir A. Karamychev & Peran van Reeven, 2009. "A Monopolist in Public Transport: Undersupply or Oversupply?," Tinbergen Institute Discussion Papers 09-077/1, Tinbergen Institute.
  5. Simon Loertscher & Yves Schneider, 2005. "Switching Costs, Firm Size, and Market Structure," SOI - Working Papers 0508, Socioeconomic Institute - University of Zurich.
  6. Zhihong Chen & Zhiqi Chen, 2011. "Product Line Rivalry: A Further Analysis," Carleton Economic Papers 11-04, Carleton University, Department of Economics.
  7. Takaki, Masaya & Matsubayashi, Nobuo, 2013. "Sequential multi-store location in a duopoly," Regional Science and Urban Economics, Elsevier, vol. 43(3), pages 491-506.
  8. Varela-Irimia, Xosé-Luís, 2011. "Multi-stage oligopoly models with nested logit demand structures: A simplifying approach," Working Papers 2072/179616, Universitat Rovira i Virgili, Department of Economics.
  9. Iida, Tetsuya & Matsubayashi, Nobuo, 2011. "Strategic multi-store opening under financial constraint," European Journal of Operational Research, Elsevier, vol. 210(2), pages 379-389, April.

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