Product innovation and logistic optimization in a novel urban-type model

We consider the strategic choice between product innovation and logistic optimization in a novel urban framework where consumers are distributed across the city and have different incomes depending on their location in the town. Depending on the relative efficiency of the product innovation process and the logistic innovation process as well as on the degree of spatial symmetry between the firms, both symmetric and asymmetric business strategy equilibria may arise, as well as both unique and multiple business strategy equilibria.