Competition by choice

This paper relates firm location choice and consumer search. Firms that cluster together attract consumers by facilitating price comparison, but clustering increases the intensity of local competition. I construct a simple model which shows that firms may choose head-on competition by locating together. In special cases, this can be the unique equilibrium outcome. I also use the model to show that price setting firms may earn more in equilibrium than quantity setting firms.

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Year of publication:	1988
Authors:	Dudey, Marc
Institutions:	Federal Reserve Board (Board of Governors of the Federal Reserve System)
Subject:	Competition \| Consumer behavior \| Business enterprises

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Extent:	text/html application/pdf
Series:	International Finance Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 327
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005368484