Consistent location conjectures under spatial price discrimination

John Heywood and Zheng Wang

Journal of Economics, 2016, vol. 117, issue 2, 167-180

Abstract: This paper is the first to model consistent location conjectures under spatial price discrimination. With linear production cost, the well-known association of spatial price discrimination with efficiency vanishes as duopolists with consistent conjectures collocate at the center. With convex production cost, the duopolists do not collocate but continue to locate closer to the center than under Nash conjectures. Yet, with sufficient cost convexity, this movement to the center can actually increase welfare relative to Nash. We extend the results with linear costs to multiple private firms. Copyright Springer-Verlag Wien 2016

Keywords: Spatial price discrimination; Consistent conjecture; L13 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:117:y:2016:i:2:p:167-180

DOI: 10.1007/s00712-015-0447-3

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