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Global and local players in a model of spatial competition

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  • Loertscher, Simon
  • Muehlheusser, Gerd

Abstract

We consider Hotelling location games with global and local players. Global players are active in several markets, while local players act in a single market only. The decisive feature is that global players cannot tailor their product to each market but have to choose a location on the Hotelling line that is valid for all markets in which they are active. Obvious examples include the media industry and politics, where competitors typically compete in several markets with basically the same product. We determine equilibrium configurations for simple specifications of such games. We then show that the presence of gp s tends to induce lower product diversity across markets. Finally, when the number of firms is endogenous, we show how gp s may use their location choice as a preemptive device
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  • Loertscher, Simon & Muehlheusser, Gerd, 2008. "Global and local players in a model of spatial competition," Economics Letters, Elsevier, vol. 98(1), pages 100-106, January.
    • Handle: RePEc:eee:ecolet:v:98:y:2008:i:1:p:100-106
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    1. Wenjiao Che & Toshiki Kodera, 2014. "Product differentiation and advertising in multiple markets," Economics Bulletin, AccessEcon, vol. 34(1), pages 400-408.
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    3. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.

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    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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