"Will That Be Pickup or Delivery?": An Alternative Spatial Pricing Strategy

William J. Furlong and George A. Slotsve

Bell Journal of Economics, 1983, vol. 14, issue 1, 271-274

Abstract: This article demonstrates that when consumers are offered a choice between pickup and delivery, a firm can increase profits relative to the case when no choice is tendered, as in the mill or uniform spatial pricing models. Further, this choice yields a lower level of welfare than that obtained under mill pricing. These results hold in models where market size is endogenous as well as exogenous to the firm's decisions, and with tastes and technology that are fairly standard in the spatial literature.

Date: 1983
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