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Optimal Differentiation and Spatial Competition: The Spokes Model with Product Delivery

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  • Carlo Reggiani

Abstract

The spokes model is a recent framework to study n-firms spatial competition. In a spatial framework firms delivering their product can price discriminate with respect to consumers’ location. Conditions for the existence of a price-location equilibrium of the spokes model with delivered product are established in both the case where there are as many firms as spokes and in the case not all spokes are occupied. The equilibrium outcome may be interpreted as one firm supplying a "general purpose product" while others focusing on their "niche".

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 09/13.

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Handle: RePEc:yor:yorken:09/13

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Keywords: spokes model; discrimination; optimal location;

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  1. Juan-José Ganuza & Esther Hauk, 2006. "Allocating Ideas: Horizontal Competition in Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(3), pages 763-787, 09.
  2. Doraszelski, Ulrich & Draganska, Michaela, 2003. "Market Segmentation Strategies of Multiproduct Firms," Research Papers 1827, Stanford University, Graduate School of Business.
  3. Jonathan Vogel, 2011. "Spatial Price Discrimination with Heterogeneous Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 661-676, December.
  4. Ramón Caminal & Adina Claici, 2005. "Are loyalty-rewarding pricing schemes anti-competitive?," Working Papers 228, Barcelona Graduate School of Economics.
  5. Thisse, Jacques-Francois & Vives, Xavier, 1988. "On the Strategic Choice of Spatial Price Policy," American Economic Review, American Economic Association, vol. 78(1), pages 122-37, March.
  6. Kats, Amoz, 1987. "Location-price equilibria in a spatial model of discriminatory pricing," Economics Letters, Elsevier, vol. 25(2), pages 105-109.
  7. Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," NBER Working Papers 10501, National Bureau of Economic Research, Inc.
  8. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  9. Hendel, Igal & de Figueiredo, John Neiva, 1997. "Product differentiation and endogenous disutility," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 63-79, November.
  10. Greenhut, M L & Ohta, H, 1972. "Monopoly Output Under Alternative Spatial Pricing Techniques," American Economic Review, American Economic Association, vol. 62(4), pages 705-13, September.
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