Firm Location Choice in the Presence of a Free Rider Problem
In this paper we show that, in the presence of an investment that provides all firms in an industry with positive externalities, a firm may choose an ‘extreme policy’. Specifically, within the context of a locational game, we show that a firm may make a positive profit by locating outside a city, if in doing so it manages to induce other firms to undertake investments that they would not undertake if the first firm was located within the city. Our finding is likely to have implications for similar locational issues such as ones facing political parties.
|Date of creation:||Nov 2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (416) 736-5083
Fax: (416) 736-5987
Web page: http://dept.econ.yorku.ca/
More information through EDIRC
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.:
- Elie Appelbaum & Eliakim Katz, 2007.
"Political extremism in the presence of a free rider problem,"
Springer, vol. 133(1), pages 31-40, October.
- Elie Appelbaum & Eliakim Katz, 2005. "Political extremism in the presence of a free rider problem," Working Papers 2005_3, York University, Department of Economics.
- Appelbaum, Elie & Weber, Shlomo, 1992. "A note on the free rider problem in oligopoly," Economics Letters, Elsevier, vol. 40(4), pages 473-480, December.
- B. Douglas Bernheim, 1984. "Strategic Deterrence of Sequential Entry into an Industry," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 1-11, Spring.
- Donnenfeld, Shabtai & Weber, Shlomo, 1992. "Vertical product differentiation with entry," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 449-472, September.
- Michael Waldman, 1985.
"Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem,"
UCLA Economics Working Papers
364, UCLA Department of Economics.
- Waldman, Michael, 1987. "Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem," Review of Economic Studies, Wiley Blackwell, vol. 54(2), pages 301-10, April.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
When requesting a correction, please mention this item's handle: RePEc:yca:wpaper:2003_6. 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: (Support)
If references are entirely missing, you can add them using this form.