IDEAS home Printed from https://ideas.repec.org/a/kap/jeczfn/v109y2013i2p193-200.html
   My bibliography  Save this article

Hotelling’s webshop

Author

Listed:
  • Mark Lijesen

    ()

Abstract

We extend Hotelling’s model of spatial competition by adding an outside good, provided by a webshop. Unlike the commonly used reservation price, the price of the webshop is endogenous. We establish that a Nash equilibrium exists if the outside good is not too different from the goods sold by the bricks-and-mortar shops. Equilibrium prices positively depend on transport costs, which would not be the case for an exogenous reservation price. If the webshop serves an alternative market as well, the price of that market is partly imported into the local market. The bricks-and-mortar shops compete only with the the webshop. The lower the webshop’s delivery costs are relative to the transport cost parameter, the wider the feasible range for locations of the bricks-and-mortar shops. Copyright Springer-Verlag 2013

Suggested Citation

  • Mark Lijesen, 2013. "Hotelling’s webshop," Journal of Economics, Springer, vol. 109(2), pages 193-200, June.
  • Handle: RePEc:kap:jeczfn:v:109:y:2013:i:2:p:193-200
    DOI: 10.1007/s00712-012-0303-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00712-012-0303-7
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
    2. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    3. Yongmin Chen & Michael H. Riordan, 2007. "Price and Variety in the Spokes Model," Economic Journal, Royal Economic Society, vol. 117(522), pages 897-921, July.
    4. Hinloopen, Jeroen & van Marrewijk, Charles, 1999. "On the limits and possibilities of the principle of minimum differentiation1," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 735-750, July.
    5. Economides, Nicholas, 1984. "The principle of minimum differentiation revisited," European Economic Review, Elsevier, vol. 24(3), pages 345-368, April.
    6. Legros, Patrick & Stahl, Konrad, 2002. "Global versus Local Competition," CEPR Discussion Papers 3333, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Birg, Laura, 2015. "Cross-border or online: Tax competition with mobile consumers under destination and origin principle," Center for European, Governance and Economic Development Research Discussion Papers 265, University of Goettingen, Department of Economics.
    2. Eveline Leeuwen & Mark Lijesen, 2016. "Agents playing Hotelling’s game: an agent-based approach to a game theoretic model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 57(2), pages 393-411, November.

    More about this item

    Keywords

    Spatial competition; Internet retail; Reservation price; Product differentiation; D43; L11; L13;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:109:y:2013:i:2:p:193-200. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.