Location in a Vertically Differentiated Industry

Bacchiega, Emanuele ; Minniti, Antonio (2005) Location in a Vertically Differentiated Industry. Bologna: Dipartimento di Scienze economiche DSE, p. 23. DOI 10.6092/unibo/amsacta/4743. In: Quaderni - Working Paper DSE (546). ISSN 2282-6483.
Full text available as:
[img]
Preview
Text(pdf)
License: Creative Commons Attribution Non-commercial

Download (250kB) | Preview

Abstract

We analyze a two-stage game in a vertically differentiated duopoly with two regions which can differ for the willingness to pay of their consumers or for the market size; firms sequentially choose to settle in one region and then simultaneously compete in prices, selling their products both on the local market and on the foreigner one by exporting them at a fixed cost. We study how strategic interaction influences firms’ location choices and we show that the decision whether to agglomerate or not crucially depends on the extent of regions’ asymmetries, but, counter intuitively, there are parametric regions in which the model predicts that the leader (the first firm choosing location) settles either in the poorer or in the smaller region, leaving the other one to the follower. Welfare analysis completes the paper.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bacchiega, Emanuele
Minniti, Antonio
Keywords
Regions, Vertical Differentiation, Oligopoly
Subjects
ISSN
2282-6483
DOI
Deposit date
01 Apr 2016 09:29
Last modified
01 Apr 2016 09:33
URI

Other metadata

Downloads

Downloads

Staff only: View the document

^