Strategic Accessibility Competition

Bacchiega, Emanuele ; Randon, Emanuela ; Zirulia, Lorenzo (2010) Strategic Accessibility Competition. Bologna: Dipartimento di Scienze economiche DSE, p. 22. DOI 10.6092/unibo/amsacta/4545. In: Quaderni - Working Paper DSE (696). ISSN 2282-6483.
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Abstract

We analyze the effect of competition in market-accessibility enhancement among quality-differentiated firms. Firms are located in regions with different ex-ante transport costs to reach the final market. We characterize the equilibrium of the two-stage game in which firms first invest to improve market accessibility and then compete in prices. Efforts in accessibility improvement crucially depend on the interplay between the willingness to pay for the quality premium of the median consumer and the ex-ante difference in accessibility between regions. From the social standpoint, all the accessibility investment should be carried out by the high-quality firm. Finally quality choice is endogenized.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bacchiega, Emanuele
Randon, Emanuela
Zirulia, Lorenzo
Keywords
Accessibility Investment, Vertical Differentiation, Transport Costs
Subjects
ISSN
2282-6483
DOI
Deposit date
04 Feb 2016 11:40
Last modified
04 Feb 2016 11:40
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