Management Science and Financial Engineering

  • 제13권2호
  • /
  • Pages.99-116
  • /
  • 2007
  • /
  • 2287-2043(pISSN)
  • /
  • 2287-2361(eISSN)
한국경영과학회 (The Korean Operations Research and Management Science Society)
권호 표지

Location Value and Price Leadership in a Product Differentiation Model

  • Ku, Hyeon-Mo (Head Office of Corperate Strategy, Korea Telecom) ;
  • Lee, Sang-Ho (Department of Economics, Chonnam National University)
  • 발행 : 2007.11.30
PDF 다운로드
⟨ 이전 논문 다음 논문 ⟩

초록

This paper considers the value of location in a linear city model and examines the product differentiation equilibrium of duopoly providing different benefits to consumers. We show that if the value of location is small, symmetric location equilibrium occurs where two firms follow the maximal differentiation principle. However, as the value of location increases, asymmetric location equilibrium occurs where the low-value-location firm moves to the high-value-location firm and thus adjusted maximal differentiation principle holds. We also investigate two different price leadership model and demonstrate the relationship between the value of location and the role of price leadership. In particular, we show that when the location value is high, the price leadership by high-value-location firm will appear as a unique equilibrium.

키워드

참고문헌

  1. Chang, M. H., "The Effect of Product Differentiation on Collusive Pricing," International Journal of Industrial Organization, 9 (1991), 453-469 https://doi.org/10.1016/0167-7187(91)90023-E
  2. Choi, C. J. and H. S. Shin, "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, 40 (1992), 229-231 https://doi.org/10.2307/2950513
  3. d'Aspremont, C., Gabszewicz, J., and J. F. Thisse, "On Hotelling's 'Stability in Competition'," Econometrica, 47 (1979), 1145-1150 https://doi.org/10.2307/1911955
  4. Dowrick, S., "Von Stackelberg and Cournot Duopoly: Choosing Roles," RAND Journal of Economics, 17 (1986), 251-260 https://doi.org/10.2307/2555388
  5. Friedman, J. and J. F. Thisse, "Partial Collusion Fosters Minimum Product Differentiation," RAND Journal of Economics, 24 (1993), 631-645 https://doi.org/10.2307/2555750
  6. Hamilton, J.H. and S.M. Slutsky, "Endogenous Timing in Duopoly Games : Stackelberg or Cournot Equilibria," Games and Economic Behavior 2 (1990), 29-46 https://doi.org/10.1016/0899-8256(90)90012-J
  7. Hotelling, H., "Stability in Competition," Economic Journal, 39 (1929), 41-47 https://doi.org/10.2307/2224214
  8. Lee, S. H., "Choosing Roles in a Model of Quality Differentiation," Seoul Journal of Economics, 9 (1996), 191-201
  9. Mai, C. C. and S. Peng, "Cooperation vs. Competition in a Spatial Model," Regional Science and Urban Economics, 29 (1999), 463-472 https://doi.org/10.1016/S0166-0462(99)00007-1
  10. Navon, A., O. Shy, and J. F. Thisse, "Product Differentiation in the Presence of Positive and Negative Network Effects," CEPR Discussion Papers. DP1306 (1995)
  11. Neven, D. J., "On Hotelling's Competition with Non-uniform Customer Distributions," Economics Letters, 21 (1986), 121-126 https://doi.org/10.1016/0165-1765(86)90049-2
  12. Shy, Oz., Industrial Organization : Theory and Applications, The MIT Press (1995)
  13. Tabuchi, T. and J. F. Thisse, "Asymmetric Equilibria in Spatial Competition," International Journal of Industrial Organization, 13 (1995), 213-227 https://doi.org/10.1016/0167-7187(94)00449-C
  14. Tirole, J., The Theory of Industrial Organization, The MIT Press (1988)
  15. Wang, X. Henry, "A Note on the High-Quality Advantage in Vertical Differentiation Models," Bulletin of Economic Research, 55 (2003), 91-99 https://doi.org/10.1111/1467-8586.00163
  16. Wauthy, X., "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, 44 (1996), 345-353 https://doi.org/10.2307/2950501