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Multi-Store Competition: Market Segmentation or Interlacing?

Author

Listed:
  • Maarten C.W. Janssen

    (Dept of Micro-Economics, Erasmus University Rotterdam)

  • Vladimir A. Karamychev

    (Dept of Information Science, Erasmus University Rotterdam)

  • Peran van Reeven

    (Dept of Regional, Port and Transport Economics, Erasmus University Rotterdam)

Abstract

This discussion paper led to a publication in the Regional Science and Urban Economics (2005). Vol. 35(6), pages 700-714. This paper develops a model for multi-store competition between firms. Using thefact that different firms have different outlets and produce horizontally differentiated goods, we obtain a pure strategy equilibrium where firms choose a different location for each outlet and firms' locations are interlaced. Moreover, generically, the subgame perfect equilibrium isunique and when the firms have an equal number of outlets, prices are independent of the number of outlets.

Suggested Citation

  • Maarten C.W. Janssen & Vladimir A. Karamychev & Peran van Reeven, 2003. "Multi-Store Competition: Market Segmentation or Interlacing?," Tinbergen Institute Discussion Papers 03-033/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030033
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    References listed on IDEAS

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    Cited by:

    1. Gu Yiquan & Wenzel Tobias, 2012. "Price-Dependent Demand in Spatial Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-26, March.
    2. Eric E. Giraud-Heraud & Abdelhakim Hammoudi, 2009. "On the existence and uniqueness of price equilibrium with multi-store firms," Post-Print hal-02659530, HAL.
    3. Unsorg, Maximiliane & Rostam-Afschar, Davud, 2021. "Entry Regulation and Competition. Evidence from retail and labor markets of pharmacists," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242426, Verein für Socialpolitik / German Economic Association.
    4. Bernhardt Dan & Graham Brett, 2015. "Multi-product Bertrand Oligopoly with Exogenous and Endogenous Consumer Heterogeneity," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 167-209, July.
    5. Shin‐Kun Peng & Takatoshi Tabuchi, 2007. "Spatial Competition in Variety and Number of Stores," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 227-250, March.
    6. Zhihong Chen & Zhiqi Chen, 2014. "Product Line Rivalry and Firm Asymmetry," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 417-435, September.
    7. Sei Beom Won, 2017. "Two-dimensional price discrimination with uncertainty about willingness-to-pay," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(3), pages 513-541, May.
    8. Yiquan Gu & Alexander Rasch & Tobias Wenzel, 2016. "Price-sensitive demand and market entry," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 865-875, November.
    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. Chung, Hwan & Lee, Eunkyu, 2017. "Store Brand Quality and Retailer’s Product Line Design," Journal of Retailing, Elsevier, vol. 93(4), pages 527-540.
    11. 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.
    12. Varela-Irimia, Xosé-Luís, 2011. "Multi-stage oligopoly models with nested logit demand structures: A simplifying approach," Working Papers 2072/179616, Universitat Rovira i Virgili, Department of Economics.
    13. Takaki, Masaya & Matsubayashi, Nobuo, 2013. "Sequential multi-store location in a duopoly," Regional Science and Urban Economics, Elsevier, vol. 43(3), pages 491-506.
    14. Simon Loertscher & Yves Schneider, 2005. "Switching Costs, Firm Size, and Market Structure," SOI - Working Papers 0508, Socioeconomic Institute - University of Zurich.
    15. Hammoudi Abdelhakim & Giraud-héraud Eric, 2009. "On the Existence and uniqueness of Price Equilibrium with Multi-Store Firms," Economics Bulletin, AccessEcon, vol. 29(2), pages 873-882.
    16. Vladimir A. Karamychev & Peran van Reeven, 2009. "A Monopolist in Public Transport: Undersupply or Oversupply?," Tinbergen Institute Discussion Papers 09-077/1, Tinbergen Institute.
    17. Mayadunne, Sanjaya & Johar, Monica & Saydam, Cem, 2018. "Competitive store closing during an economic downturn," International Journal of Production Economics, Elsevier, vol. 199(C), pages 162-178.
    18. Omer Ben-Porat & Moshe Tennenholtz, 2019. "Multiunit Facility Location Games," Mathematics of Operations Research, INFORMS, vol. 44(3), pages 865-889, August.
    19. Zhihong Chen & Zhiqi Chen, 2011. "Product Line Rivalry: A Further Analysis," Carleton Economic Papers 11-04, Carleton University, Department of Economics.

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    More about this item

    Keywords

    multi-store competition; hotelling; interlacing;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D10 - Microeconomics - - Household Behavior - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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