â€œIneffectiveâ€ competition: a puzzle?
Conventionally, we think of an increase in competition as weakly decreasing prices, increasing the number of consumers served, thus increasing consumer surplus, decreasing firms profits, etc. Here, we demonstrate that, under some tame circumstances, an increase in competition may lead to a price increase in a horizontally differentiated market. We show this relationship for the petrol market in German cities.
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- Anderson, Simon P, 1988.
"Equilibrium Existence in the Linear Model of Spatial Competition,"
London School of Economics and Political Science, vol. 55(220), pages 479-91, November.
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- Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
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