{"title":"Location, Location, Quality:The Fixed Differentiation Principle","authors":"Alon Cohen, Aviad Heifetz","doi":"10.1007/s11151-024-09989-3","DOIUrl":null,"url":null,"abstract":"<p>This work revisits the classic spatial duopoly location-then-prices competition with quadratic transportation costs, in the presence of vertical differentiation. We show that contrary to the substitutability between horizontal and vertical differentiation that has appeared thus far in the literature, higher-quality asymmetry does not affect locational differentiation in equilibrium. While the better-quality seller indeed approaches the city center, the worse-quality seller is simultaneously driven further away from the city, and ultimately out of the market when quality differences become large enough. Interestingly, although vertical differentiation weakens competition, total welfare increases – even when the better-quality seller ultimately monopolizes the market.</p>","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":"23 1","pages":""},"PeriodicalIF":0.8000,"publicationDate":"2024-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Industrial Organization","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s11151-024-09989-3","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This work revisits the classic spatial duopoly location-then-prices competition with quadratic transportation costs, in the presence of vertical differentiation. We show that contrary to the substitutability between horizontal and vertical differentiation that has appeared thus far in the literature, higher-quality asymmetry does not affect locational differentiation in equilibrium. While the better-quality seller indeed approaches the city center, the worse-quality seller is simultaneously driven further away from the city, and ultimately out of the market when quality differences become large enough. Interestingly, although vertical differentiation weakens competition, total welfare increases – even when the better-quality seller ultimately monopolizes the market.
期刊介绍：
New Online Manuscript Submission System The Review of Industrial Organization publishes research papers on all aspects of industrial organization, broadly defined. A main focus is on competition and monopoly, in their many forms and processes and their effects on efficiency, innovation, and social conditions. Topics may range from the internal organization of enterprises to wide international comparisons.
The Review is also increasing its interest in papers on public policies such as antitrust, regulation, deregulation, public enterprise, and privatization. Papers may deal with any economic sectors and any developed economies.
The Review continues its primary interest in ideas that can be verified by econometric evidence, case studies, or other real conditions. But the Review also seeks papers that advance significant theories of industrial organization and policy. Papers using abstract techniques and econometric tests should present the methods and analysis in plain enough English so that non-specialist readers can evaluate the content.
The Review welcomes submissions from any source, and the Editors will make every effort to have papers reviewed quickly and to give prompt decisions. The Editors will also seek to arrange symposia on specific topics, and they are open to proposals for grouped papers. They also welcome shorter notes and commentaries on topics of interest to the profession.
Officially cited as: Rev Ind Organ
京公网安备 11010802042870号
京ICP备2023020795号-1
分享
求助内容：
应助结果提醒方式：
扫码关注我们
