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

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Torrisi, Gianpiero

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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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12694.

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Date of creation: Jan 2008
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Handle: RePEc:pra:mprapa:12694

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Related research
Keywords: Product differentiation; Hotelling; Empirical analysis;

Find related papers by JEL classification:
C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - General
C00 - Mathematical and Quantitative Methods - - General - - - General
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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  1. Marcella Scrimitore, 2003. "Symmetric and Asymmetric Equilibria in a Spatial Duopoly," ERSA conference papers ersa03p194, European Regional Science Association. [Downloadable!]
  2. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring. [Downloadable!] (restricted)
  3. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-72, March. [Downloadable!] (restricted)
  4. Jehiel, Philippe, 1992. "Product differentiation and price collusion," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 633-641, December. [Downloadable!] (restricted)
  5. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June. [Downloadable!] (restricted)
  6. Calvó-Armengol, Antoni & Zenou, Yves, 2001. "The Importance of the Distribution of Consumers in Horizontal Product Differentiation," CEPR Discussion Papers 3031, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Corrado Benassi & Roberto Cellini & Alessandra Chirco, 1999. "Market power under income polarization," Journal of Economics, Springer, vol. 69(3), pages 289-298, October. [Downloadable!] (restricted)
  8. Corrado Benassi & Alessandra Chirco, 2008. "An elasticity approach to equilibrium and preference concentration in the Hotelling game," Journal of Economics, Springer, vol. 94(2), pages 125-141, July. [Downloadable!] (restricted)
  9. Anderson, Simon P. & Goeree, Jacob K. & Ramer, Roald, 1997. "Location, Location, Location," Journal of Economic Theory, Elsevier, vol. 77(1), pages 102-127, November. [Downloadable!] (restricted)
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