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Location decision of managerial firms in an unconstrained Hotelling model

Author

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  • Leonard F. S. Wang
  • Domenico Buccella

Abstract

This paper applies an unconstrained Hotelling linear city model to study the effects of managerial delegation on the firms’ location/product differentiation level in a duopoly industry. It is shown that managerial delegation strongly affects firms’ location/product differentiation choice, both in the simultaneous and sequential moves in one of the three‐stage location‐incentive‐pricing game structure of the model. While sequential moves in the location distance/quality differentiation stage decrease the distance among firms, sequential moves in the incentive‐pricing stages increase it. The social welfare consequences are analysed.

Suggested Citation

  • Leonard F. S. Wang & Domenico Buccella, 2020. "Location decision of managerial firms in an unconstrained Hotelling model," Bulletin of Economic Research, Wiley Blackwell, vol. 72(3), pages 318-332, July.
    • Handle: RePEc:bla:buecrs:v:72:y:2020:i:3:p:318-332
    DOI: 10.1111/boer.12224
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    References listed on IDEAS

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    Cited by:

    1. Hang Cao & Leonard F. S. Wang, 2023. "Optimal zoning of managerial duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 58-67, January.
    2. Chen, Tai-Liang & Yang, Mingjie, 2024. "Brand loyalty, managerial delegation and position choices: Bertrand versus Cournot competition," Regional Science and Urban Economics, Elsevier, vol. 109(C).

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