Payoff interdependence and the multi-store paradox

Kosuke Hirose and Toshihiro Matsumura

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 3, 256-267

Abstract: We solve the multi-store paradox by introducing interdependent payoffs between the firms. We show that firms set up multiple stores unless the degree of payoff interdependence is low. We also show that multiple equilibria, namely intertwined and neighboring location equilibria, exist if the degree of payoff interdependence is intermediate.

Date: 2016
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DOI: 10.1080/16081625.2016.1188447

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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