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Multiproduct Firms in Hotelling’s Spatial Competition

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  • Takatoshi Tabuchi

Abstract

Oligopoly models are usually analyzed in the context of two firms, anticipating that market outcomes would be qualitatively similar in the case of three or more firms. The literature on Hotelling’s location‐then‐price competition is not an exception. In this paper, we show that the main finding of brand bunching in Hotelling’s duopoly no longer holds once three or more firms are allowed to enter the market. That is, in oligopoly with three or more firms, firms proliferate brands.

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  • Takatoshi Tabuchi, 2012. "Multiproduct Firms in Hotelling’s Spatial Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(2), pages 445-467, June.
    • Handle: RePEc:bla:jemstr:v:21:y:2012:i:2:p:445-467
    DOI: j.1530-9134.2012.00336.x
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    References listed on IDEAS

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    1. Takatoshi Tabuchi, 2009. "Hotelling's Spatial Competition Reconsidered," CIRJE F-Series CIRJE-F-674, CIRJE, Faculty of Economics, University of Tokyo.
    2. Giacomo Bonanno, 1987. "Location Choice, Product Proliferation and Entry Deterrence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 37-45.
    3. Kenneth L. Judd, 1985. "Credible Spatial Preemption," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 153-166, Summer.
    4. Eric Giraud‐Héraud & Hakim Hammoudi & Mahdi Mokrane, 2003. "Multiproduct firm behaviour in a differentiated market," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(1), pages 41-61, March.
    5. Rath, Kali P. & Zhao, Gongyun, 2001. "Two stage equilibrium and product choice with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 19(9), pages 1441-1455, November.
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    7. repec:bla:ausecp:v:38:y:1999:i:3:p:259-75 is not listed on IDEAS
    8. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 1995. "Asymmetric equilibria in spatial competition," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 213-227.
    9. Neven, Damien J., 1987. "Endogenous sequential entry in a spatial model," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 419-434.
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    11. Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
    12. Economides, Nicholas, 1984. "The principle of minimum differentiation revisited," European Economic Review, Elsevier, vol. 24(3), pages 345-368, April.
    13. Eric Giraud-Héraud & Hakim Hammoudi & Mahdi Mokrane, 2003. "Multiproduct firm behaviour in a differentiated market," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 41-61, February.
    14. Steffen Brenner, 2005. "Hotelling Games with Three, Four, and More Players," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 851-864, November.
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    Cited by:

    1. Gabszewicz, Jean J. & Marini, Marco A. & Tarola, Ornella, 2017. "Vertical differentiation and collusion: Pruning or proliferation?," Research in Economics, Elsevier, vol. 71(1), pages 129-139.
    2. Sawoong Kang & Jeong-Yoo Kim, 2022. "Credible spatial preemption in a mixed oligopoly," Journal of Economics, Springer, vol. 137(2), pages 171-190, October.
    3. Sesmero, Juan P. & Balagtas, Joseph V. & Pratt, Michelle, 2015. "The Economics of Spatial Competition for Corn Stover," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-17, September.
    4. Dirk Crass & Franz Schwiebacher, 2017. "The importance of trademark protection for product differentiation and innovation," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(2), pages 199-220, June.
    5. Manfred Stadler, 2019. "Location in a Disk City with Consumer Concentration Around the Center," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 71(1), pages 35-50, February.
    6. Kosuke Hirose & Toshihiro Matsumura, 2016. "Payoff interdependence and the multi-store paradox," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 256-267, July.
    7. Gabszewicz, Jean J. & Marini, Marco A. & Tarola, Ornella, 2016. "Vertical Differentiation and Collusion: Cannibalization or Proliferation?," ETA: Economic Theory and Applications 232221, Fondazione Eni Enrico Mattei (FEEM).
    8. Hara, Reiya & Matsubayashi, Nobuo, 2017. "Premium store brand: Product development collaboration between retailers and national brand manufacturers," International Journal of Production Economics, Elsevier, vol. 185(C), pages 128-138.
    9. Nicoletta Corrocher & Marco Guerzoni, 2015. "Post-Entry Product Introduction: Who Explores New Niches?," Industry and Innovation, Taylor & Francis Journals, vol. 22(1), pages 18-36, January.
    10. Takaki, Masaya & Matsubayashi, Nobuo, 2013. "Sequential multi-store location in a duopoly," Regional Science and Urban Economics, Elsevier, vol. 43(3), pages 491-506.

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