Full or partial market coverage? A note on spatial competition with elastic demand

Giovanni Nero ()

Managerial and Decision Economics, 1999, vol. 20, issue 2, 107-111

Abstract: In this paper, a spatial model is used to endogenously determine product locations and prices when consumers have an elastic demand with a finite reservation price. I show under which condition a two-stage Bertrand-Nash equilibrium yields maximal product differentiation with full market covering. Additionally, this paper highlights the effects of a change in the reservation price and in the utility loss rate on the equilibrium values of the model. The ambiguous effect of a change in the utility loss rate on prices constitutes a rather puzzling result. Copyright © 1999 John Wiley & Sons, Ltd.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:20:y:1999:i:2:p:107-111

DOI: 10.1002/(SICI)1099-1468(199903)20:2<107::AID-MDE921>3.0.CO;2-C

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