EconPapers    
Economics at your fingertips  
 

Location Choice of a Partially–Private Monopoly Supplier

Doriani Lingga and Damiana Simanjuntak

Studies in Microeconomics, 2022, vol. 10, issue 1, 106-121

Abstract: This paper analyzes the location choice of an upstream monopolist who supplies input to asymmetric duopoly firms in a downstream market. The monopolist is partially private, in that it cares not only about its profit maximization but also about the survival of the downstream firms. Based on the Hotelling model, we find that the monopolist is always attracted to locate closer to the efficient downstream firm. In particular, when the efficiency difference between the two downstream firms is not too high, such that no firm is driven out of the market, the monopolist locates at a distance of 1/6 from the efficient firm in the line segment of unit length. Finally, considering the downstream firms’ survival, we show that the upstream monopolist charges a higher input price on the efficient firm. This study may be relevant to the product differentiation framework, in which firms can benefit from producing goods that are close to the preference of high-type consumers; to the pharmaceutical industry, in which pharmacy companies must cover a broad market segment; or to the policymaking process, in which policymakers may have an incentive to make a policy preferred by a particular group of the society. JEL Classifications: D42, L12, L230

Keywords: Cost asymmetry; location; monopoly supplier; partially private monopolist (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/23210222211032108 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:10:y:2022:i:1:p:106-121

DOI: 10.1177/23210222211032108

Access Statistics for this article

More articles in Studies in Microeconomics
Bibliographic data for series maintained by SAGE Publications ().

 
Page updated 2022-05-07
Handle: RePEc:sae:miceco:v:10:y:2022:i:1:p:106-121