IDEAS home Printed from https://ideas.repec.org/p/man/sespap/0707.html
   My bibliography  Save this paper

Oligopoly on a Salop circle with centre

Author

Listed:
  • Paul Madden
  • Mario Pezzino

Abstract

We study an oligopolistic market in which consumers located around the perimeter of a Salop circle buy either from firms around this perimeter (providing horizontally differentiated goods) or from a firm located at the centre of the circle (providing a homogeneous good). An entry-pricing game is studied. The market equilibria and social optima indicate various possible market failures, including cases in which the market is served only by perimeter firms whilst central provision would be socially optimal (in this sense, more extreme than the standard Salop excessive product differentiation). Moreover, for some parameters, the standard Salop result might be reversed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Paul Madden & Mario Pezzino, 2007. "Oligopoly on a Salop circle with centre," Economics Discussion Paper Series 0707, Economics, The University of Manchester.
    • Handle: RePEc:man:sespap:0707
    as

    Download full text from publisher

    File URL: https://hummedia.manchester.ac.uk/schools/soss/economics/discussionpapers/EDP-0707.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    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. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    3. Geoffrey Heal, 1980. "Spatial Structure in the Retail Trade: A Study in Product Differentiation with Increasing Returns," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 565-583, Autumn.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Gu Yiquan & Wenzel Tobias, 2012. "Price-Dependent Demand in Spatial Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-26, March.
    2. Kopányi, Dávid, 2017. "The coexistence of stable equilibria under least squares learning," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 277-300.
    3. 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.
    4. Laura Levaggi & Rosella Levaggi, 2024. "Spatial Competition Models in Health Care Markets: A Review," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(3), pages 721-743, November.
    5. Birg, Laura, 2019. "Substitution Policy and Generic Competition," University of Göttingen Working Papers in Economics 241, University of Goettingen, Department of Economics, revised 2019.
    6. Lau, C. Oscar, 2022. "Travel Circle: A Model of Supply Chains," MPRA Paper 115291, University Library of Munich, Germany.
    7. Indranil Dutta & Mario Pezzino & Yan Song, 2022. "Should developing countries ban dual practice by physicians? Analysis under mixed hospital competition," Health Economics, John Wiley & Sons, Ltd., vol. 31(11), pages 2289-2310, November.
    8. 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.
    9. Levaggi, Laura & Levaggi, Rosella, 2023. "Competition in the provision of hospital care: Are mixed markets a valid alternative?," Economic Modelling, Elsevier, vol. 127(C).
    10. Sovik Mukherjee & Vivekananda Mukherjee, 2023. "“Love for variety,” outside option and extensive margin of demand," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 425-449, September.
    11. Kinshuk Jerath & S. Sajeesh & Z. John Zhang, 2016. "A Model of Unorganized and Organized Retailing in Emerging Economies," Marketing Science, INFORMS, vol. 35(5), pages 756-778, September.
    12. Gremm, Cornelia & Bälz, David & Corbo, Chris & Mitusch, Kay, 2019. "Intermodal competition between intercity buses and trains: A theoretical model," Working Paper Series in Economics 135, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    13. 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.
    14. 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.
    15. Fabio Lamantia & Mario Pezzino, 2016. "R&D Spillovers on a Salop Circle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 37(7), pages 485-494, October.
    16. 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).
    17. Urmann, Oliver, 2012. "Insurance in vertically differentiated repair markets," Economics Letters, Elsevier, vol. 116(1), pages 121-123.
    18. Laura Levaggi & Rosella Levaggi, 2017. "Oligopolistic competition for the provision of hospital care," Working papers 57, Società Italiana di Economia Pubblica.
    19. Nielsen, Carsten Krabbe & Weinrich, Gerd, 2023. "Bank regulation and market structure," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    20. Barrie R. Nault & Mohammad S. Rahman, 2019. "Proximity to a Traditional Physical Store: The Effects of Mitigating Online Disutility Costs," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 1033-1051, April.

    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. Kleer, Robin & Piller, Frank T., 2019. "Local manufacturing and structural shifts in competition: Market dynamics of additive manufacturing," International Journal of Production Economics, Elsevier, vol. 216(C), pages 23-34.
    2. 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.
    3. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2008. "Mass Customization vs. Mass Production: Variety and Price Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 204-217, August.
    4. Yuetao Gao, 2018. "On the Use of Overt Anti-Counterfeiting Technologies," Marketing Science, INFORMS, vol. 37(3), pages 403-424, May.
    5. 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.
    6. Fraser Summerfield, 2016. "Matching Skill and Tasks: Cyclical Fluctuations in the Overqualification of New Hires," Working Paper series 16-08, Rimini Centre for Economic Analysis.
    7. 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.
    8. 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.
    9. 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.
    10. Stahl, Konrad, 2002. "Global versus Local Competition," CEPR Discussion Papers 3333, C.E.P.R. Discussion Papers.
    11. Barrie R. Nault & Mohammad S. Rahman, 2019. "Proximity to a Traditional Physical Store: The Effects of Mitigating Online Disutility Costs," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 1033-1051, April.
    12. 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.
    13. Evelyn O. Smith & Jeffrey D. Shulman, 2022. "Product diversion by vertically differentiated firms," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 1928-1939, May.
    14. Allen C. Goodman & Miron Stano, 2000. "Hmos and Health Externalities: A Local Public Good Perspective," Public Finance Review, , vol. 28(3), pages 247-269, May.
    15. Kopányi, Dávid, 2017. "The coexistence of stable equilibria under least squares learning," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 277-300.
    16. Gerhard Clemenz & Klaus Gugler, 2009. "Locational choice and price competition: some empirical results for the austrian retail gasoline market," Studies in Empirical Economics, in: Giuseppe Arbia & Badi H. Baltagi (ed.), Spatial Econometrics, pages 223-244, Springer.
    17. Corchón Luis Carlos & Zudenkova Galina, 2013. "The Welfare Effects of Location and Quality in Oligopoly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 1143-1178, July.
    18. Chad Syverson, 2001. "Output Market Segmentation and Productivity," Working Papers 01-07, Center for Economic Studies, U.S. Census Bureau.
    19. Xiao, Tiaojun & Choi, Tsan-Ming & Cheng, T.C.E., 2014. "Product variety and channel structure strategy for a retailer-Stackelberg supply chain," European Journal of Operational Research, Elsevier, vol. 233(1), pages 114-124.
    20. Audretsch, David B. & Baumol, William J. & Burke, Andrew E., 2001. "Competition policy in dynamic markets," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 613-634, April.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:man:sespap:0707. 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: Patrick Macnamara (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.html .

    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.