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Models of firms' location in new markets, and certain repeated games have the feature that players must make location decisions (either in geographical space or in product-characteristics space) in an uncertain environment and without the precise knowledge of where other entrants will locate. This article presents a noncooperative equilibrium in which entrants locate rationally in the light of information available to them. This equilibrium is similar in spirit to the type of equilibrium used in the auction literature by Wilson (1977), Matthews (1979), and Holt (1979). The main difference is that in the location game players are not in a win-or-lose situation, but rather they have a chance of obtaining a market share anywhere between zero and one.
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Volume (Year): 12 (1981)
Issue (Month): 2 (Autumn)
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