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Indirect Competition with Spatial Product Differentiation

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  • Cooper, Thomas E

Abstract

Although two markets may appear to be separate, sometimes one firm participates in both of them. That firm provides a link between the two markets. Such a straddling firm transmits indirect competition from each market to the other since its actions reflect competitive conditions in both markets. In a model of spatial product differentiation, the author shows that indirect competition may make a market perform significantly better than the number of firms would indicate. Moreover, total consumer surplus increases if two previously-distinct markets are linked by a straddler. Finally, the author considers implications of these results for antitrust analysis. Copyright 1989 by Blackwell Publishing Ltd.

Suggested Citation

  • Cooper, Thomas E, 1989. "Indirect Competition with Spatial Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 241-257, March.
    • Handle: RePEc:bla:jindec:v:37:y:1989:i:3:p:241-57
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    Cited by:

    1. Donna, Javier D. & Schenone, Pablo & Veramendi, Gregory F., 2020. "Networks, frictions, and price dispersion," Games and Economic Behavior, Elsevier, vol. 124(C), pages 406-431.
    2. Juan Coello, 1994. "¿Son las cajas y los bancos estratégicamente equivalentes?," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 313-332, May.
    3. Sandro Shelegia, 2012. "Is the Competitor of my Competitor also my Competitor?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 927-963, December.
    4. Robert A. Ritz, 2016. "Strategic investment, multimarket interaction and competitive advantage: An application to the natural gas industry," Cambridge Working Papers in Economics 1603, Faculty of Economics, University of Cambridge.
    5. Siva Viswanathan, 2005. "Competing Across Technology-Differentiated Channels: The Impact of Network Externalities and Switching Costs," Management Science, INFORMS, vol. 51(3), pages 483-496, March.

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