IDEAS home Printed from https://ideas.repec.org/a/spr/presci/v82y2003i4p555-568.html
   My bibliography  Save this article

How demand affects optimal prices and product differentiation

Author

Listed:
  • Alessandra Chirco
  • Luca Lambertini
  • Fabio Zagonari

Abstract

We investigate the bearings of the level of demand on firms’ optimal locations and prices in a linear model of spatial differentiation with quadratic disutility of transportation. We show that demand affects both optimal prices and optimal locations of firms, in that firms increase product differentiation only if demand is high enough to trigger a price war. Otherwise, the non-cooperative duopoly equilibrium is observationally equivalent to the monopoly optimum with the same number of products. Contrary to the linear transportation cost case, optimal prices are everywhere increasing in the reservation price. Copyright Springer-Verlag Berlin/Heidelberg 2003

Suggested Citation

  • Alessandra Chirco & Luca Lambertini & Fabio Zagonari, 2003. "How demand affects optimal prices and product differentiation," Papers in Regional Science, Springer;Regional Science Association International, vol. 82(4), pages 555-568, November.
    • Handle: RePEc:spr:presci:v:82:y:2003:i:4:p:555-568
    DOI: 10.1007/s10110-003-0173-z
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zacharias, Eleftherios, 2009. "Firm entry, product repositioning and welfare," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1225-1235, November.
    2. Marcella Scrimitore, 2003. "Symmetric and Asymmetric Equilibria in a Spatial Duopoly," ERSA conference papers ersa03p194, European Regional Science Association.
    3. Gori, Giuseppe Francesco & Lambertini, Luca, 2013. "Trade liberalisation between asymmetric countries with environmentally concerned consumers," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 549-560.
    4. Dragone, Davide & Lambertini, Luca, 2020. "Equilibrium existence in the Hotelling model with convex production costs," Regional Science and Urban Economics, Elsevier, vol. 84(C).

    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:spr:presci:v:82:y:2003:i:4:p:555-568. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.