Multi-stage oligopoly models with nested logit demand structures: A simplifying approach
Solving multi-stage oligopoly models by backward induction can easily become a com- plex task when rms are multi-product and demands are derived from a nested logit frame- work. This paper shows that under the assumption that within-segment rm shares are equal across segments, the analytical expression for equilibrium pro ts can be substantially simpli ed. The size of the error arising when this condition does not hold perfectly is also computed. Through numerical examples, it is shown that the error is rather small in general. Therefore, using this assumption allows to gain analytical tractability in a class of models that has been used to approach relevant policy questions, such as for example rm entry in an industry or the relation between competition and location. The simplifying approach proposed in this paper is aimed at helping improving these type of models for reaching more accurate recommendations.
|Date of creation:||2011|
|Contact details of provider:|| Postal: Avda. de la Universitat,1 - 43204 Reus (Tarragona)|
Phone: 977 75 98 00
Fax: 977 75 98 10
Web page: http://www.urv.cat
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christou, Charalambos & Vettas, Nikolaos, 2005.
"Location choices under quality uncertainty,"
Mathematical Social Sciences,
Elsevier, vol. 50(3), pages 268-278, November.
- Anderson, Simon P & de Palma, Andre, 1992.
"Multiproduct Firms: A Nested Logit Approach,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 40(3), pages 261-276, September.
- Zhou, Dongsheng & Vertinsky, Ilan, 2001. "Strategic location decisions in a growing market," Regional Science and Urban Economics, Elsevier, vol. 31(5), pages 523-533, September.
- Pal, Debashis & Sarkar, Jyotirmoy, 2002. "Spatial competition among multi-store firms," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 163-190, February.
- Darlene Chisholm & George Norman, 2002.
"Heterogeneous Preferences and Location Choice with Multi-Product Firms,"
Discussion Papers Series, Department of Economics, Tufts University
0205, Department of Economics, Tufts University.
- Chisholm, Darlene C. & Norman, George, 2004. "Heterogeneous preferences and location choice with multi-product firms," Regional Science and Urban Economics, Elsevier, vol. 34(3), pages 321-339, May.
- Grossmann, Volker, 2007. "Firm size and diversification: Multiproduct firms in asymmetric oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 51-67, February.
- Economides, Nicholas, 1993. "Quality variations in the circular model of variety-differentiated products," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 235-257, April.
- Maarten C.W. Janssen & Vladimir A. Karamychev & Peran van Reeven, 2003.
"Multi-Store Competition: Market Segmentation or Interlacing?,"
Tinbergen Institute Discussion Papers
03-033/1, Tinbergen Institute.
- Janssen, Maarten C.W. & Karamychev, Vladimir A. & van Reeven, Peran, 2005. "Multi-store competition: Market segmentation or interlacing?," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 700-714, November.
- María Moral & Jordi Jaumandreu, 2007. "Automobile demand, model cycle and age effects," Spanish Economic Review, Springer;Spanish Economic Association, vol. 9(3), pages 193-218, September.
When requesting a correction, please mention this item's handle: RePEc:urv:wpaper:2072/179616. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ariadna Casals)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.