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Local Search Markets and External Competition

Patrick Legros and Konrad Stahl

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Increased competition tends to benefit all buyers with increasing product variety and decreasing prices. However, if local and external market channels compete for the same class of products, increased competition from the external market crowds out local variety. Under local monopoly, local buyer surplus co-moves with external buyer surplus. Under local free entry oligopoly, buyer surplus is U-shaped. If buyer surplus in the external market is low, local surplus is better provided by local oligopoly, but moves against external surplus; if it is high, local and external surplus co-move, and local surplus is better provided by local monopoly.

Keywords: Global competition; Monopoly; Oligopoly; Search (search for similar items in EconPapers)
JEL-codes: D83 L12 L13 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Date: 2019-04
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Working Paper: Local search markets and external competition (2019) Downloads
Working Paper: Local Search Markets and External Competition (2019) Downloads
Working Paper: Local Search Markets and External Competition (2019) Downloads
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