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Spatial Competition with Elastic Demand : Some Results

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Author Info
Nero, G

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Abstract

In this paper, a spatial (circular) model is used to endogenously determine product locations and prices when consumers have an elastic (linear) demand with a finite reservation price. I show that a symmetric two-stage Bertrand-Nash equilibrium requires maximal product differentiation. Additionally, the paper investigates the relationship between reservation price and market coverage. Finally, the paper highlights the effects of changes in the reservation price and the 'freight' rate on the equilibrium values of the model.

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Publisher Info
Paper provided by University of Geneva, Department of Political Economy in its series University of Geneva Economics Working Papers with number 96.12.

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Length: 8 pages
Date of creation: 1996
Date of revision:
Handle: RePEc:fth:geneec:96.12

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Postal: Uni Mail, 102 Bd Carl-Vogt, CH-1211 Gen�ve 4
Phone: (+ 41 22) 705-8263
Fax: (+ 41 22) 705-8293
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Web page: http://www.unige.ch/ses/ecopo/
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Related research
Keywords: DUOPOLIES DEMAND COMPETITION

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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