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Horizontal Product Differentiation in Varian's Model of Sales
| Content Provider | Scilit |
|---|---|
| Author | Nakagawa, Kuninori |
| Copyright Year | 2017 |
| Description | Journal: SSRN Electronic Journal We consider the explicit introduction of firms' choice of location to Varian's model of sales for a two-stage spatial competition model based on a standard Hotelling's linear city model. This model is the formalization of Varian's model of sales in the context of Hotelling's spatial competition. We obtain three main results. First, we show that there exists a subgame perfect equilibrium in which each firm chooses a symmetric mixed strategy equilibrium profile. This equilibrium includes symmetric location pairs and asymmetric location pairs. Second, the equilibrium behaviors in our model are randomized at both location and price stages. Third, we show that expected profits in a subgame perfect equilibrium are equal to the maximum monopoly profit from an uninformed market. Thus, even when product differentiation is explicitly introduced into a Varian-type model, Varian's implication can be retained; the opportunity for profit in an informed market is lost with competition. |
| Related Links | http://arxiv.org/pdf/1705.02594 https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=2964449 |
| ISSN | 10914358 |
| e-ISSN | 15565068 |
| DOI | 10.2139/ssrn.2964449 |
| Journal | SSRN Electronic Journal |
| Language | English |
| Publisher | Elsevier BV |
| Publisher Date | 2017-05-07 |
| Access Restriction | Open |
| Subject Keyword | Journal: SSRN Electronic Journal Product Differentiation |
| Content Type | Text |
| Resource Type | Article |
| Subject | Public Health, Environmental and Occupational Health Psychiatry and Mental Health |
