The Welfare Effects of Location and Quality in Oligopoly

Luis Corchon and Galina Zudenkova ()

The B.E. Journal of Economic Analysis & Policy, 2013, vol. 13, issue 2, 1143-1178

Abstract: In this article, we show that in models where location is endogenous, maximum welfare losses arising from non-optimal locations or from the lack of market coverage may be substantial. In contrast, maximum welfare losses arising from non-optimal quality choices are more modest, but they might vary discontinuously with the dispersion in consumer tastes. Very often, welfare losses can be inferred from data.

Keywords: welfare losses; horizontal differentiation; Hotelling model; Salop model; vertical differentiation (search for similar items in EconPapers)
JEL-codes: D61 L11 L13 L50 (search for similar items in EconPapers)
Date: 2013
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Working Paper: The welfare effects of location and quality in oligopoly (2010)
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DOI: 10.1515/bejeap-2012-0045

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