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When do co-located firms selling identical products thrive?
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Bernhardt, Dan, Constantinou, Evangelos and Shadmehr, Mehdi (2019) When do co-located firms selling identical products thrive? Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1202). (Unpublished)
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Official URL: https://warwick.ac.uk/fac/soc/economics/research/w...
Abstract
When consumers only see prices once they visit stores, and some consumers have time to comparison shop, co-location commits stores to compete and lower prices, which draws consumers away from isolated stores. Profits of co-located firms are a single-peaked function of the number of shoppers—co-located firms thrive when there are some shoppers, but not too many. When consumers know in advance whether they have time to shop, effects are enhanced: co-located stores may draw enough shoppers to drive the expected price paid by a non-shopper below that paid when consumers do not know if they will have time to shop.
| Item Type: | Working or Discussion Paper (Working Paper) | ||||
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| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce |
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| Divisions: | Faculty of Social Sciences > Economics | ||||
| Library of Congress Subject Headings (LCSH): | Competition, Consumer behavior , Price fixing | ||||
| Series Name: | Warwick economics research papers series (WERPS) | ||||
| Publisher: | University of Warwick. Department of Economics | ||||
| Place of Publication: | Coventry | ||||
| ISSN: | 0083-7350 | ||||
| Official Date: | June 2019 | ||||
| Dates: |
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| Number: | 1202 | ||||
| Institution: | University of Warwick | ||||
| Status: | Not Peer Reviewed | ||||
| Publication Status: | Unpublished | ||||
| Access rights to Published version: | Open Access (Creative Commons) |
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