Sequential location under one-sided demand uncertainty
Aurélie Bonein () and
Stéphane Turolla ()
Research in Economics, 2009, vol. 63, issue 3, 145-159
In entering a new market, firms face demand uncertainty. We depart from the usual Hotelling duopoly model with sequential entry. We allow firms to locate outside of the city and assume that market conditions are common knowledge. We then introduce one-sided demand uncertainty. We find that demand uncertainty can be seen as a differentiation force when faced by the first entrant and as an agglomeration force when faced by the second entrant. Finally, the second firm's imperfect information implies higher welfare losses.
Keywords: Location; Hotelling; Sequential; duopoly; game; Product; differentiation; Demand; uncertainty (search for similar items in EconPapers)
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Working Paper: Sequential location under one-sided demand uncertainty (2009)
Working Paper: Sequential Location under one-sided Demand Uncertainty (2007)
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