Strategic Clustering and Competition by Alcohol Retailers: An Emperical Anlysis of Entry and Location Decisions

Yi Deng () and Gabriel Picone ()
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Yi Deng: Department of Economics, University of South Florida

No 1013, Working Papers from University of South Florida, Department of Economics

Abstract: We develop and estimate a spatial game-theoretic model of entry and location choices to examine firms� strategic clustering decisions. The model identifies two contradictory effects that determine firms� geographical location choices: a competition effect and a clustering effect. We also separate firms� strategic clustering incentives from the observed clustering behavior due to exogenous factors such as population and topographic desirability or constraints. In particular, we examine two closely related industries that share similar location limitations but have different strategic incentives to cluster, jointly estimate the Bayesian Nash equilibrium of a two-industry entry and location game, and quantify the strategic clustering incentives.

JEL-codes: L13 L81 R12 R30 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-01
New Economics Papers: this item is included in nep-com, nep-cse, nep-geo and nep-ure
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