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Endogenous R&D Spillovers and Locational Choice with discriminatory pricing

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  • Claudio Piga
  • Joanna Poyago-Theotoky

Abstract

We present a model of spatial price discrimination where R&D spillovers are endogenous as they depend on firms' location. We establish that both the distance between locations and R&D efforts are increasing functions of the transportation cost coefficient and show that there is a continuum of cases where firms will chose an intermediate location. The managerial implications from the model are discussed using examples of marketing behaviour by Internet retailers.

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Bibliographic Info

Paper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 0311.

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Date of creation: Nov 2003
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Handle: RePEc:san:crieff:0311

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Related research

Keywords: Endogenous spillovers; Quality-enhancing R&D; Location; Spatial price discrimination.;

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  1. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
  2. Claudio A. Piga, 1998. "A Dynamic Model of Advertising and Product Differentiation," Review of Industrial Organization, Springer, vol. 13(5), pages 509-522, October.
  3. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-40, June.
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