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Endogenous R&D spillovers and locational choice with discriminatory pricing

Author

Listed:
  • Claudio Piga

    (University of Nottingham, Nottingham, UK)

  • Joanna Poyago-Theotoky

    (University of St. Andrews, Fife, St. Andrews, UK)

Abstract

We present a model of spatial price discrimination where R&D spillovers are endogenous as they depend on firms' location. We establish that both the distance between locations and R&D efforts are an increasing function of the transportation cost coefficient and show that there is a continuum of cases where firms will choose an intermediate location. The managerial implications from the model are discussed using examples of marketing behavior by Internet retailers. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Claudio Piga & Joanna Poyago-Theotoky, 2004. "Endogenous R&D spillovers and locational choice with discriminatory pricing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 157-161.
  • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:3:p:157-161
    DOI: 10.1002/mde.1137
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    References listed on IDEAS

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    1. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    2. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    3. Claudio A. Piga, 1998. "A Dynamic Model of Advertising and Product Differentiation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(5), pages 509-522, October.
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