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Location, Price, And Welfare In The Oligopoly With One Online Firm

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  • Wen-Jung Liang
  • Yi-Jie Wang

Abstract

We utilize a barbell model, in which both the physical firms’ costs and markets are asymmetric, to examine the effects of increasing the number of firms by introducing one online firm into the markets on physical firms’ location choices, outputs, price, and welfare under Cournot competition. We show that introducing one online firm may induce the two physical firms to switch their optimal locations from agglomeration at the urban market to separate at different markets, may decline the total sales and raise the price level in the urban market, and may worsen the welfare level.

Suggested Citation

  • Wen-Jung Liang & Yi-Jie Wang, 2019. "Location, Price, And Welfare In The Oligopoly With One Online Firm," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 13(1), pages 148-160.
    • Handle: RePEc:isp:journl:v:13:y:2019:i:1:p:148-160
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    References listed on IDEAS

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    More about this item

    Keywords

    online firm; location choices; market asymmetry; cournot competition;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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