The location model with two periods of price competition

H.M. Webers

Research output: Book/ReportReportProfessional

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Abstract

In this paper we characterize the subgame perfect Nash equilibria of a location-then-price game where firms first choose locations and after that compete for prices in two subsequent periods. Locations are thus seen as long term commitments. There are two types of consumers, each with different valuations for the variants offered by the firms. Due to changes in the fractions of the consumer types, competition in both periods differs. Firms anticipate that their location choice in uences price competition in both periods and therefore maximize their lifetime profit. Although we cannot give explicit expressions for the firms' location choices, we can prove the existence of a unique subgame perfect Nash equilibrium.
Original languageEnglish
PublisherUnknown Publisher
Number of pages17
VolumeFEW 663
Publication statusPublished - 1994

Publication series

NameResearch memorandum / Tilburg University, Department of Economics
VolumeFEW 663

Fingerprint

Location model
Price competition
Location choice
Subgame perfect Nash equilibrium
Profit
Firm location

Keywords

  • Game Theory
  • Location Theory
  • Nash Equilibrium
  • Price Competition
  • game theory

Cite this

Webers, H. M. (1994). The location model with two periods of price competition. (Research memorandum / Tilburg University, Department of Economics; Vol. FEW 663). Unknown Publisher.
Webers, H.M. / The location model with two periods of price competition. Unknown Publisher, 1994. 17 p. (Research memorandum / Tilburg University, Department of Economics).
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Webers, HM 1994, The location model with two periods of price competition. Research memorandum / Tilburg University, Department of Economics, vol. FEW 663, vol. FEW 663, Unknown Publisher.

The location model with two periods of price competition. / Webers, H.M.

Unknown Publisher, 1994. 17 p. (Research memorandum / Tilburg University, Department of Economics; Vol. FEW 663).

Research output: Book/ReportReportProfessional

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N2 - In this paper we characterize the subgame perfect Nash equilibria of a location-then-price game where firms first choose locations and after that compete for prices in two subsequent periods. Locations are thus seen as long term commitments. There are two types of consumers, each with different valuations for the variants offered by the firms. Due to changes in the fractions of the consumer types, competition in both periods differs. Firms anticipate that their location choice in uences price competition in both periods and therefore maximize their lifetime profit. Although we cannot give explicit expressions for the firms' location choices, we can prove the existence of a unique subgame perfect Nash equilibrium.

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Webers HM. The location model with two periods of price competition. Unknown Publisher, 1994. 17 p. (Research memorandum / Tilburg University, Department of Economics).