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Spatial Price Discrimination with Heterogeneous Firms

Spatial Price Discrimination with Heterogeneous Firms
Author: Jonathan Vogel
Publisher:
Total Pages: 0
Release: 2011
Genre:
ISBN:

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In this paper we aim to explain intuitively heterogeneous firms' optimal location decisions in a simple spatial market. To do so, we present and solve a four-stage game of entry, location, pricing and consumption in a spatial price discrimination framework with arbitrarily many heterogeneous firms. We provide a unique equilibrium outcome without imposing restrictions on the distribution of marginal costs across firms.


Spatial Price Discrimination in the Spokes Model

Spatial Price Discrimination in the Spokes Model
Author: Carlo Reggiani
Publisher:
Total Pages: 0
Release: 2014
Genre:
ISBN:

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The spokes model allows to address nonlocalized spatial competition between firms. In a spatial context, firms can price discriminate using location-contingent pricing. Nonlocalized competition implies that neighboring effects are not relevant to firms. This paper analyzes spatial price discrimination and location choices in the spokes model. Highly asymmetric location patterns are one outcome if the number of firms is sufficiently high: in that case, one firm supplies a generally appealing product whereas others focus on a specific niche. Moreover, multiple equilibria arise for intermediate values of the number of firms. In this case, the location patterns do not always globally minimize the sum of transport costs: asymmetric configurations distribute more efficiently the cost between firms.


The Economics of Price Discrimination

The Economics of Price Discrimination
Author: George Norman
Publisher: Edward Elgar Publishing
Total Pages: 624
Release: 1999
Genre: Business & Economics
ISBN:

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This volume brings together significant articles which have appeared between 1971 and 1997, analyzing the application and effects of price discrimination.


Heterogeneous Firms, Agglomeration and Economic Geography

Heterogeneous Firms, Agglomeration and Economic Geography
Author: Richard E. Baldwin
Publisher:
Total Pages:
Release: 2010
Genre:
ISBN:

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A Melitz-style model of monopolistic competition with heterogeneous firms is integrated into a simple new economic geography model to show that the standard assumption of identical firms is neither necessary nor innocuous. We show that relocating to the big region is most attractive for the most productive firms; this implies interesting results for empirical work and policy analysis. A `selection effect' means standard empirical measures overestimate agglomeration economies. A `sorting effect' means that a regional policy induces the highest productivity firms to move to the core and the lowest productivity firms to the periphery. We also show that heterogeneity dampens the home market effect.


Spatial Models of Heterogeneous Switching Costs

Spatial Models of Heterogeneous Switching Costs
Author: Paolo Siciliani
Publisher:
Total Pages: 39
Release: 2017
Genre:
ISBN:

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The presence of sticky, often labelled 'unengaged', consumers is arguably one of the most intractable issues faced by competition regulators, in that it entrenches incumbency advantage. We develop a spatial linear model of heterogeneous switching costs that allows for asymmetric distributions of heterogeneous switching costs. We not only model uniform pricing and history-based price discrimination, but also the impact of regulatory intervention aimed at making it easier for customers to be upgraded to a better tariff from their current service provider, something we call 'leakage'. Finally, we analyse firms' incentive to adopt history-based price discrimination and voluntarily permit 'leakage'


Comparative Advantage and Heterogeneous Firms

Comparative Advantage and Heterogeneous Firms
Author: Andrew B. Bernard
Publisher:
Total Pages: 0
Release: 2006
Genre:
ISBN:

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This paper examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization. When firms possess heterogeneous productivity, countries differ in relative factor abundance and industries vary in factor intensity, falling trade costs induce reallocations of resources both within and across industries and countries. These reallocations generate substantial job turnover in all sectors, spur relatively more creative destruction in comparative advantage industries than comparative disadvantage industries, and magnify ex ante comparative advantage to create additional welfare gains from trade. The relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices. In contrast with the neoclassical model, these price declines dampen and can even reverse the real wage losses of scarce factors as countries liberalize.