Asymmetric Entrant Locaiton with a Discrete Consumer Distribution: Spatial Price Discrimination Versus Mill Pricing |
| |
Authors: | Ralph M Braid |
| |
Institution: | Wayne State University, Detroit, MI |
| |
Abstract: | In this paper I examine the profit-maximizing locations of entrants. Suppose that firms practice spatial price discrimination and consumer locations are discrete, such as five equally spaced towns on a roadway. With completely inelastic consumer demand an entrant between two existing firms is often indifferent between the symmetric (central) location and a continuum of asymmetric (noncentral) locations. However, downward-sloping consumer demand often causes the entrant to strictly prefer either of two asymmetric locations to any other location. These results are very different from those found in mill-pricing (free-on-board or f.o.b.-pricing) models. |
| |
Keywords: | |
|
|