research notes and comments: Spatial competition with profit-maximising and labour-managed firms

Luca Lambertini ()

Papers in Regional Science, 2001, vol. 80, issue 4, 499-507

Abstract: The nature of the equilibria arising under spatial differentiation is investigated here in a duopoly model, where at least one firm maximises value added per worker. The study shows that if firms' objectives differ, there exists a subgame perfect equilibrium in pure strategies, which is possibly characterised by asymmetric locations. If both firms are labour-managed, there exists a (symmetric) subgame perfect equilibrium in pure strategies with firms located at the first and third quartiles, if and only if the setup cost is low enough. Otherwise, undercutting is profitable.

Keywords: Minimum differentiation; location; value added (search for similar items in EconPapers)
Date: 2001-10-25
Note: Received: 16 March 2000
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Citations: View citations in EconPapers (7)

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