Spatial Competition with Non-monotonic Network Effects and Endogenous Firm Location Decisions PDF Download

Author: Luca Savorelli
Publisher:
ISBN:
Category : Marketing
Languages : en
Pages : 28

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Book Description
"We consider a spatial duopoly with non-monotonic network effects and extend the literature by endogenizing firms' location decisions. We show that the existence of equilibrium is ruled out due to displacement incentives at the location stage whenever network effects are sufficiently strong. Furthermore, unlike in exogenous location models, neither vertical product differentiation nor a monopoly outcome can arise endogenously in equilibrium. Relative to monotonic network effect models, our framework provides an additional rationale for a duopolistic market structure to be welfare-preferred to monopoly: for large population sizes, splitting demand between two firms can reduce the disutility from crowding."--Abstract from publisher's website.