Sequential Location under one-sided Demand Uncertainty

Aurélie Bonein () and Stéphane Turolla ()

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: By entering new market, firms face uncertainty about their potential demand. We depart from the usual Hotelling duopoly model with sequential entry. Firms can locate outside the city and market conditions are common knowledge. Then we introduce one-sided demand uncertainty. It results that demand uncertainty can be seen as a diferentiation force when the first entrant faces demand uncertainty and as an agglomeration force when it is the second entrant. Finally, firm 2's imperfect information implies higher welfare losses.

New Economics Papers: this item is included in nep-com and nep-mic
Date: 2007-11, Revised 2007-11

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Persistent link: http://EconPapers.repec.org/RePEc:lam:wpaper:07-12

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