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Common ownership in a delivered pricing duopoly

Author

Listed:
  • Nuowen Bai

    (The University of Tokyo
    The University of Tokyo)

  • Toshihiro Matsumura

    (The University of Tokyo
    The University of Tokyo)

Abstract

This study investigates how common ownership affects the location choice of duopolists. We formulate a shipping (delivered pricing) model on the Hotelling line in which firms choose their locations and then compete in prices. We show that even if high prices due to common ownership do not reduce welfare under inelastic demand, common ownership can still lead to welfare loss by promoting dispersion among firms. We also find that common ownership promotes transport cost-reducing investments and accelerates welfare loss in excessive investments.

Suggested Citation

  • Nuowen Bai & Toshihiro Matsumura, 2023. "Common ownership in a delivered pricing duopoly," Journal of Economics, Springer, vol. 139(3), pages 191-208, August.
    • Handle: RePEc:kap:jeczfn:v:139:y:2023:i:3:d:10.1007_s00712-023-00822-1
    DOI: 10.1007/s00712-023-00822-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Overlapping ownership; Distortion of location choice; Spatial price discrimination; Flexible manufacturing system; Endogenous flexibility;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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