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Spatial Competition in Variety and Number of Stores

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Abstract

We propose location-then-variety competition for a multi-product and multi-store oligopoly, in which the number of firms, the number of stores and their location, and the number of varieties are endogenously determined. We show that as compared to price-then-variety and quantity-then-variety competition, location-then-variety competition with multi-stores yields a much richer set of equilibrium outcomes, such as market segmentation, interlacing, sandwich and enclosure.

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  • Shin-Kun Peng & Takatoshi Tabuchi, 2006. "Spatial Competition in Variety and Number of Stores," IEAS Working Paper : academic research 06-A002, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    • Handle: RePEc:sin:wpaper:06-a002
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    Cited by:

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    2. Yi‐Ling Cheng & Takatoshi Tabuchi, 2018. "Multiproduct oligopoly and trade between asymmetric countries," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 524-538, August.
    3. Tabuchi, Takatoshi, 2009. "Self-organizing marketplaces," Journal of Urban Economics, Elsevier, vol. 66(3), pages 179-185, November.
    4. Kelemen, József, 2020. "Szimultán Hotelling-modell Cobb-Douglas-hasznosságfüggvénnyel [A simultaneous Hotelling model with a Cobb-Douglas utility function]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 14-30.
    5. repec:rre:publsh:v:38:y:2008:i:1:p:8-28 is not listed on IDEAS
    6. Wang, Xin & Ouyang, Yanfeng, 2013. "A continuum approximation approach to competitive facility location design under facility disruption risks," Transportation Research Part B: Methodological, Elsevier, vol. 50(C), pages 90-103.
    7. Mitsukuni Nishida, 2017. "First-Mover Advantage Through Distribution: A Decomposition Approach," Marketing Science, INFORMS, vol. 36(4), pages 590-609, July.
    8. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.
    9. Karamychev, Vladimir & van Reeven, Peran, 2009. "Retail sprawl and multi-store firms: An analysis of location choice by retail chains," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 277-286, May.
    10. 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.
    11. Takaki, Masaya & Matsubayashi, Nobuo, 2013. "Sequential multi-store location in a duopoly," Regional Science and Urban Economics, Elsevier, vol. 43(3), pages 491-506.
    12. Chih-Peng Chu & Wen-Chung Guo & Fu-Chuan Lai, 2012. "On the competition between an online bookstore and a physical bookstore," Netnomics, Springer, vol. 13(3), pages 141-154, October.
    13. Toshiharu Ishikawa, 2013. "An analysis of the effects of the variety of items on the retailer's market areas and the urban system," ERSA conference papers ersa13p9, European Regional Science Association.
    14. Takatoshi Tabuchi, 2009. "Hotelling's Spatial Competition Reconsidered," CIRJE F-Series CIRJE-F-674, CIRJE, Faculty of Economics, University of Tokyo.
    15. Gu, Yiquan & Wenzel, Tobias, 2009. "A note on the excess entry theorem in spatial models with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 567-571, September.
    16. Stefano Colombo & Noriaki Matsushima, 2020. "Competition Between Offline and Online Retailers with Heterogeneous Customers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(3), pages 647-664, November.
    17. repec:zbw:rwirep:0033 is not listed on IDEAS
    18. Matsubayashi, Nobuo & Ishii, Yasuaki & Watanabe, Kentaro & Yamada, Yoshiyasu, 2009. "Full-line or specialization strategy? The negative effect of product variety on product line strategy," European Journal of Operational Research, Elsevier, vol. 196(2), pages 795-807, July.
    19. Hong Hwang & Chao‐Cheng Mai & Hiroshi Ohta, 2010. "Who Benefits From Pricing Regulations When Economic Space Matters?," The Japanese Economic Review, Japanese Economic Association, vol. 61(2), pages 218-233, June.
    20. Yi-Ling Cheng & Shin-Kun Peng, 2012. "Quality and Quantity Competition in a Multiproduct Duopoly," Southern Economic Journal, John Wiley & Sons, vol. 79(1), pages 180-202, July.
    21. Garrido-da-Silva, Liliana & Castro, Sofia B.S.D. & Correia-da-Silva, João, 2022. "Location of housing and industry around city centre amenities," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    22. Yiquan Gu & Tobias Wenzel, 2007. "A Note on the Excess Entry Theorem in Spatial Models with Elastic Demand," Ruhr Economic Papers 0033, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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    More about this item

    Keywords

    multi-store firms; multi-product firms; variety competition; spatial preemption; natural oligopoly;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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