IDEAS home Printed from https://ideas.repec.org/a/isp/journl/v13y2019i1p148-160.html
   My bibliography  Save this article

Location, Price, And Welfare In The Oligopoly With One Online Firm

Author

Listed:
  • Wen-Jung Liang
  • Yi-Jie Wang

Abstract

We utilize a barbell model, in which both the physical firms’ costs and markets are asymmetric, to examine the effects of increasing the number of firms by introducing one online firm into the markets on physical firms’ location choices, outputs, price, and welfare under Cournot competition. We show that introducing one online firm may induce the two physical firms to switch their optimal locations from agglomeration at the urban market to separate at different markets, may decline the total sales and raise the price level in the urban market, and may worsen the welfare level.

Suggested Citation

  • Wen-Jung Liang & Yi-Jie Wang, 2019. "Location, Price, And Welfare In The Oligopoly With One Online Firm," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 13(1), pages 148-160.
    • Handle: RePEc:isp:journl:v:13:y:2019:i:1:p:148-160
    as

    Download full text from publisher

    File URL: https://www.scientific-publications.net/get/1000037/1570291106149627.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bouckaert, Jan, 2000. "Monopolistic competition with a mail order business," Economics Letters, Elsevier, vol. 66(3), pages 303-310, March.
    2. Bakaouka, Elpiniki & Milliou, Chrysovalantou, 2018. "Vertical licensing, input pricing, and entry," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 66-96.
    3. Liang, Wen-Jung & Hwang, Hong & Mai, Chao-Cheng, 2006. "Spatial discrimination: Bertrand vs. Cournot with asymmetric demands," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 790-802, November.
    4. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    5. Yunchuan Liu & Sunil Gupta & Z. John Zhang, 2006. "Note on Self-Restraint as an Online Entry-Deterrence Strategy," Management Science, INFORMS, vol. 52(11), pages 1799-1809, November.
    6. Wen-Chung Guo & Fu-Chuan Lai, 2017. "Prices, Locations and Welfare When an Online Retailer Competes with Heterogeneous Brick-and-Mortar Retailers," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 439-468, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Han, Haipeng & Lien, Donald & Lien, Jaimie W. & Zheng, Jie, 2022. "Online or face-to-face? Competition among MOOC and regular education providers," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 857-881.
    2. Stefano Colombo & Noriaki Matsushima, 2020. "Competition Between Offline and Online Retailers with Heterogeneous Customers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(3), pages 647-664, November.
    3. Stefano Colombo & Zemin Hou, 2021. "Location-Price Equilibria when Traditional Retailers Compete Against an Online Retailer," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(3), pages 483-502, November.
    4. Ford, Weixing & Li, Yixiu & Zheng, Jie, 2021. "Numbers of bricks and clicks: Price competition between online and offline stores," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 420-440.
    5. Matsui, Kenji, 2016. "Asymmetric product distribution between symmetric manufacturers using dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 248(2), pages 646-657.
    6. Mingming Shi & Jun Zhou & Zhou Jiang, 2019. "Consumer heterogeneity and online vs. offline retail spatial competition," Frontiers of Business Research in China, Springer, vol. 13(1), pages 1-19, December.
    7. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial competition with quadratic transport costs and one online firm," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 309-324, January.
    8. Xubing Zhang, 2009. "Retailers' Multichannel and Price Advertising Strategies," Marketing Science, INFORMS, vol. 28(6), pages 1080-1094, 11-12.
    9. Bourreau, Marc & Manenti, Fabio M., 2023. "Selling cross-border in online markets: The impact of the ban on geoblocking strategies," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    10. Nakayama, Yuji, 2009. "The impact of e-commerce: It always benefits consumers, but may reduce social welfare," Japan and the World Economy, Elsevier, vol. 21(3), pages 239-247, August.
    11. Negoro, Kazuhiro & Matsubayashi, Nobuo, 2021. "Game-theoretic analysis of partner selection strategies for market entry in global supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    12. Wang, Wei & Li, Gang & Cheng, T.C.E., 2016. "Channel selection in a supply chain with a multi-channel retailer: The role of channel operating costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 54-65.
    13. Zheyin (Jane) Gu & Giri K. Tayi, 2015. "Consumer mending and online retailer fit-uncertainty mitigating strategies," Quantitative Marketing and Economics (QME), Springer, vol. 13(3), pages 251-282, September.
    14. Guo, Wen-Chung & Lai, Fu-Chuan, 2022. "Price discrimination under online–offline competition," Economics Letters, Elsevier, vol. 216(C).
    15. Firgo, Matthias & Pennerstorfer, Dieter & Weiss, Christoph R., 2015. "Centrality and pricing in spatially differentiated markets: The case of gasoline," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 81-90.
    16. Haiyan Wang & Tatsuhiko Nariu, 2012. "Distribution Channel Management in an Internet Age: Equilibrium and Social Welfare," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 285-298, September.
    17. Francisco Jesús Guerrero López & Paula Margaretic & Lucía Quesada & Federico Sturzenegger, 2024. "Banks or Fintechs? A Roadmap for Regulation," Working Papers 327, Red Nacional de Investigadores en Economía (RedNIE).
    18. Chris Forman & Anindya Ghose & Avi Goldfarb, 2009. "Competition Between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live," Management Science, INFORMS, vol. 55(1), pages 47-57, January.
    19. Gokan,Toshitaka & Thisse,Jacques-François, 2024. "Are spatial differentiation and product differentiation substitutes?," IDE Discussion Papers 943, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    20. Pavel Kireyev & Vineet Kumar & Elie Ofek, 2017. "Match Your Own Price? Self-Matching as a Retailer’s Multichannel Pricing Strategy," Marketing Science, INFORMS, vol. 36(6), pages 908-930, November.

    More about this item

    Keywords

    online firm; location choices; market asymmetry; cournot competition;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isp:journl:v:13:y:2019:i:1:p:148-160. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Svetoslav Ivanov (email available below). General contact details of provider: https://www.scientific-publications.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.