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Consistent location conjectures under spatial price discrimination

Author

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  • John Heywood
  • Zheng Wang

Abstract

This paper is the first to model consistent location conjectures under spatial price discrimination. With linear production cost, the well-known association of spatial price discrimination with efficiency vanishes as duopolists with consistent conjectures collocate at the center. With convex production cost, the duopolists do not collocate but continue to locate closer to the center than under Nash conjectures. Yet, with sufficient cost convexity, this movement to the center can actually increase welfare relative to Nash. We extend the results with linear costs to multiple private firms. Copyright Springer-Verlag Wien 2016

Suggested Citation

  • John Heywood & Zheng Wang, 2016. "Consistent location conjectures under spatial price discrimination," Journal of Economics, Springer, vol. 117(2), pages 167-180, March.
  • Handle: RePEc:kap:jeczfn:v:117:y:2016:i:2:p:167-180
    DOI: 10.1007/s00712-015-0447-3
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    Citations

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    Cited by:

    1. Michelacakis, Nickolas, 2021. "Strategic delegation in spatial price discrimination mixed duopoly; Nash is consistent at the presence of a public firm," MPRA Paper 109011, University Library of Munich, Germany.
    2. Michelacakis, Nickolas J., 2023. "Nash versus consistent equilibrium: A comparative perspective on a mixed duopoly location model of spatial price discrimination with delegation," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    3. Gabriel Courey, 2018. "Spatial price discrimination, sequential location and convex production costs," Letters in Spatial and Resource Sciences, Springer, vol. 11(2), pages 223-232, July.

    More about this item

    Keywords

    Spatial price discrimination; Consistent conjecture; L13;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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