The paper examines a quantity-location duopoly game in a spatial discrimination model in which the delivered goods are assumed to be imperfect substitutes or complements. By extending the range of the unit transportation cost analyzed in the existing literature, it is shown that a dispersed equilibrium arises in which the choice of the optimal locations is affected by the degree of product substitutability. The interaction between the latter and the size of the transportation cost is also discussed in order to verify its welfare implications. In particular, it is shown that in this spatial framework imperfect substitutability may increase welfare. Codice Scopus: 2-s2.0-79958859470
Spatial Discrimination, Product Substitutability and Welfare
SCRIMITORE, Marcella
2011-01-01
Abstract
The paper examines a quantity-location duopoly game in a spatial discrimination model in which the delivered goods are assumed to be imperfect substitutes or complements. By extending the range of the unit transportation cost analyzed in the existing literature, it is shown that a dispersed equilibrium arises in which the choice of the optimal locations is affected by the degree of product substitutability. The interaction between the latter and the size of the transportation cost is also discussed in order to verify its welfare implications. In particular, it is shown that in this spatial framework imperfect substitutability may increase welfare. Codice Scopus: 2-s2.0-79958859470I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
