The model of the linear city under a triangular distribution of consumers: an empirical analysis on price and location of beverage kiosks in Catania

Torrisi, Gianpiero (2008): The model of the linear city under a triangular distribution of consumers: an empirical analysis on price and location of beverage kiosks in Catania.

Abstract

This paper presents a model of oligopolistic competition under horizontal differentiation of products and a triangular distribution of consumers. The triangular distribution aims to represent a case of concentration of consumers around the central location. The main result is that a good deal of differentiation among products is achieved also under such assumption concerning the consumers’ distribution. This means that the incentive to differentiate – to some extent - prevails on the incentive to the central location, although consumers are concentrated in the central location. The analysis on an original empirical case-study is presented, concerning the choice of beverage retails in a town. The empirical evidence is consistent with the theoretical model.

• Item Type: MPRA Paper
• Language: English
• Keywords: Product differentiation; Hotelling; Empirical analysis
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; C - Mathematical and Quantitative Methods > C0 - General > C00 - General; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General

References

Anderson, S. P. – J. K. Goeree,– R. Ramer, 1997, “Location, location, location”, Journal of Economic Theory, vol. 77, pp. 102–127.

Benassi, C. – R. Cellini – A. Chirco, 1999, “Market Power under Income Polarization”, Journal of Economics, vol. 3, pp. 289-298.

Benassi, C. – A. Chirco, 2008, “An elasticity approach to equilibrium and preference concentration in the Hotelling game”, Journal of Economics, vol.94, pp. 125-141.

Bertrand, J., 1883, “Théorie mathématique de la richesse sociale”, Journal des Savants, vol. 48, pp. 499-508.

Calvò-Armengol, A.- Y. Zenou, 2001, “The importance of the distribution of consumers in horizontal product differentiation”, dattiloscritto.

Carraro, C. – C. Graziano, 1993, “Mercati oligopolistici e strategie dell’impresa”, il Mulino, Bologna.

Cori, B. – G. Corna - Pellegrini - G. Dematteis - P. Pierotti, 1998, “Geografia Urbana”,Utet, Torino.

d’Aspremont,C. – J. J. Gabszewicz - J. F. Thisse, 1979, “On Hotelling’s Stability in Competition”, Econometrica, vol. 17, pp.1145-1151.

Economides, N., 1986, “Minimal and Maximal Differentiation in Hotelling’s Duopoly”, Economic Letters, vol. 21, pp.160-172.

Economides, N., 1989, “Symmetric Equilibrium Existence and Optimality in Differentiated Products Markets”, Journal of Economic Theory, vol. 47, pp. 178-194.

Gabszewicz, J. - J. F. Thisse, 1986, “On the Nature of Competition with Differentiated Products”, Economic Journal, vol. 96, pp.160-172.

Gabszewicz, J. - J. F. Thisse, 1979, “Price Competition, Quality and Income Disparities”, Journal of Economic Theory” , vol. 20, pp. 340-359.

Garella, P. - L. Lambertini, 2001, Organizzazione Industriale, Carocci, Roma.

Hay, D. - J. Morris, 1979, “Economia Industriale. Teoria e Verifiche Empiriche”, il Mulino, Bologna.

Hotelling, H., 1929, “Stability in Competition”, Economic Journal, , vol.39, pp. 41-57.

Jehiel, P., 1992, “Product Differentiation and Price Collusion”, International Journal of Industrial Organisation, vol.10, pp. 633-642.

Liarte, S – B. Forgues, 2008, “Location strategies of multiunit service businesses: spatial differentiation and agglomeration among hamburger restaurants in Paris, 1984–2004”, Service Business, vol.2, pp. 233-248.

Neven, J., 1986, “On Hotelling’s Competition with Non-Uniform Customer Distributions”, Economics Letters, vol. 21, pp. 121-126.

Robinson, J., 1933, “The Economics of Imperfect Competition”, Macmillan, London.

Salop, S., 1979, “Monopolistic Competition with Outside Goods”, Bell Journal of Economics, vol.10, pp. 141-156.

Scrimitore, M., 2003, “Symmetric and Asymmetric Equilibria in a Spatial Duopoly”, dattiloscritto, Lecce.

Selten, R., 1975, “Re-examination of the Perfectness Concept for Equilibrium Points in Extensive Games”, International Journal of Game Theory ,vol. 4, pp. 25-55.

Shaked, A. - J. Sutton, 1982, “Relaxing Price Competition Thought Product Differentiation”, Review of Economic Studies, vol. 49, pp. 3-13.