A Location Model with Preference for Variety
Konstantinos Serfes () and
No 127, Econometric Society 2004 North American Summer Meetings from Econometric Society
We propose a new location model where consumers are allowed to make multiple purchases (i.e., one unit from each firm). This model fits many markets (e.g. newspapers, credit cards, scholarly journals, subscriptions to TV channels, etc.) better than existing models. A common feature of these markets is that some consumers are loyal to one brand, while others consume more than one product. Our model yields predictions consistent with this observation. Moreover, it restores Hotelling's Principle of Minimum Differentiation, by generating an equilibrium in pure strategies and with a linear transportation cost, where firms are located at the center and charge prices above marginal cost
Keywords: Hotelling model; Horizontal differentiation; Preference for variety (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
http://ms.cc.sunysb.edu/~kserfes/variety.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to ms.cc.sunysb.edu:80 (No connection could be made because the target machine actively refused it.)
Journal Article: A LOCATION MODEL WITH PREFERENCE FOR VARIETY* (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:127
Access Statistics for this paper
More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().