Product differentiation and entry timing in a continuous time spatial competition model

Takeshi Ebina, Noriaki Matsushima and Daisuke Shimizu

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: We extend the well-known spatial competition model (d'Aspremont et al., 1979) to a continuous time model in which two firms compete in each instance. Our focus is on the entry timing decisions of firms and their optimal locations. We demonstrate that the leader has an incentive to locate closer to the centre to delay the follower's entry, leading to a non-maximum differentiation outcome. We also investigate how exogenous parameters affect the leader's location and firms' values and, in particular, numerically show that the profit of the leader changes non-monotonically with an increase in the transport cost parameter.

Date: 2014-10
New Economics Papers: this item is included in nep-com, nep-geo and nep-ind
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Citations: View citations in EconPapers (2)

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Journal Article: Product differentiation and entry timing in a continuous time spatial competition model (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0915

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