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Payoff interdependence and the multi-store paradox

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  • Kosuke Hirose
  • Toshihiro Matsumura

Abstract

We solve the multi-store paradox by introducing interdependent payoffs between the firms. We show that firms set up multiple stores unless the degree of payoff interdependence is low. We also show that multiple equilibria, namely intertwined and neighboring location equilibria, exist if the degree of payoff interdependence is intermediate.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:raaexx:v:23:y:2016:i:3:p:256-267
    DOI: 10.1080/16081625.2016.1188447
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    Cited by:

    1. Sawoong Kang & Jeong-Yoo Kim, 2022. "Credible spatial preemption in a mixed oligopoly," Journal of Economics, Springer, vol. 137(2), pages 171-190, October.
    2. Xingtang Wang & Jie Li, 2020. "Downstream rivals’ competition, bargaining, and welfare," Journal of Economics, Springer, vol. 131(1), pages 61-75, September.
    3. Xu, Lili & Matsumura, Toshihiro, 2022. "Welfare-reducing price competition under relative performance delegation with convex costs," Economic Modelling, Elsevier, vol. 112(C).

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