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Bertrand†Nash mill pricing and the locations of two firms with partially overlapping product selections

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Listed:
  • Braid, Ralph M.

Abstract

This paper assumes Bertrand†Nash†mill†price competition between two firms on a unit interval, with each firm selling two out of three products, and transportation costs that are proportional to distance squared. If c consumers per unit length desire each monopoly product, and b per unit length desire the duopoly product, then the equilibrium locations of the two firms are more centralized the higher the ratio c/b, more centralized than the socially optimal locations for c/b above a critical value, and completely centralized for c/b above a different critical value. A number of variations of the model are also presented.

Suggested Citation

Handle: RePEc:eee:paresc:v:90:y:2011:i:1:p:197-212
DOI: 10.1111/j.1435-5957.2010.00329.x
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File URL: http://www.sciencedirect.com/science/article/pii/S1056819023020833
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JEL classification:

  • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
  • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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