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The role of consumer networks in firms' multi-characteristics competition and market-share inequality

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  • Antonios Garas
  • Athanasios Lapatinas

Abstract

We develop a location analysis spatial model of firms' competition in multi-characteristics space, where consumers' opinions about the firms' products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products' multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Proposing a dynamic agent-based analysis on firms' location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms' managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.

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  • Antonios Garas & Athanasios Lapatinas, 2016. "The role of consumer networks in firms' multi-characteristics competition and market-share inequality," Papers 1601.05660, arXiv.org, revised Aug 2017.
    • Handle: RePEc:arx:papers:1601.05660
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    Cited by:

    1. Qingchun Meng & Zhen Zhang & Xiaole Wan & Xiaoxia Rong, 2018. "Properties Exploring and Information Mining in Consumer Community Network: A Case of Huawei Pollen Club," Complexity, Hindawi, vol. 2018, pages 1-19, November.

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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