Location Choice and Price Discrimination in a Duopoly

Tommaso Valletti

No 2322, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper analyzes the problem of price discrimination in a market where consumers have heterogeneous preferences over both a horizontal parameter (brand) and a vertical one (quality). A model with two firms competing over locations and non-linear contracts is analyzed. Discriminatory contracts are first characterized at each location. It is then shown that locations have a big impact on the firms' discriminatory ability and that equilibrium locations are non-monotonic in consumer types; however firms never locate too far away from the first and third quartiles.

Keywords: horizontal and vertical differentiation; Location; Price Discrimination (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 1999-12
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Citations: View citations in EconPapers (2)

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Journal Article: Location choice and price discrimination in a duopoly (2002)
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