The Library
Multi-product Bertrand Oligopoly with exogenous and endogenous consumer heterogeneity
Tools
Bernhardt, Dan and Graham, Brett (2015) Multi-product Bertrand Oligopoly with exogenous and endogenous consumer heterogeneity. The B.E. Journal of Theoretical Economics, 15 (2). pp. 167-209. doi:10.1515/bejte-2014-0031 ISSN 2194-6124.
|
PDF
WRAP_bejte-2014-0031.pdf - Requires a PDF viewer. Download (1502Kb) | Preview |
|
PDF
WRAP_Bernhardt_competitive_franchising_Oct_31_2014.pdf Embargoed item. Restricted access to Repository staff only - Requires a PDF viewer. Download (472Kb) |
Official URL: http://dx.doi.org/10.1515/bejte-2014-0031
Abstract
We develop a spatial model in which consumers receive firm-specific location shocks and firms endogenously determine both franchise/product locations and prices. Remarkably, firms fail to profit from endogenous product-specific heterogeneity alone: while ex-post consumer heterogeneity ensures positive gross profits, competition for market share results in socially excessive product lines and zero net profits. With added exogenous taste heterogeneity, endogenous spatial heterogeneity drives profits below their levels with only taste heterogeneity. Finally, we introduce multiple product lines and show that when product costs differ across lines, firms earn positive profits as long as consumer preferences over lines are imperfectly correlated.
Item Type: | Journal Article | ||||
---|---|---|---|---|---|
Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce |
||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Store location, Competition, Consumers' preferences | ||||
Journal or Publication Title: | The B.E. Journal of Theoretical Economics | ||||
Publisher: | De Gruyter | ||||
ISSN: | 2194-6124 | ||||
Official Date: | January 2015 | ||||
Dates: |
|
||||
Volume: | 15 | ||||
Number: | 2 | ||||
Number of Pages: | 43 | ||||
Page Range: | pp. 167-209 | ||||
DOI: | 10.1515/bejte-2014-0031 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |