✦ LIBER ✦
Full or partial market coverage? A note on spatial competition with elastic demand
✍ Scribed by Giovanni Nero
- Publisher
- John Wiley and Sons
- Year
- 1999
- Tongue
- English
- Weight
- 72 KB
- Volume
- 20
- Category
- Article
- ISSN
- 0143-6570
No coin nor oath required. For personal study only.
✦ Synopsis
In this paper, a spatial model is used to endogenously determine product locations and prices when consumers have an elastic demand with a finite reservation price. I show under which condition a two-stage Bertrand-Nash equilibrium yields maximal product differentiation with full market covering. Additionally, this paper highlights the effects of a change in the reservation price and in the utility loss rate on the equilibrium values of the model. The ambiguous effect of a change in the utility loss rate on prices constitutes a rather puzzling result.