Catalog competition in Hotelling's duopoly

Concurrence en catalogue dans le duopole d'Hotelling

Pierre Fleckinger () and Thierry Lafay ()
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Thierry Lafay: UP1 - Université Paris 1 Panthéon-Sorbonne

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Abstract: We study a duopoly on a market with horizontal differentiation where firms compete in catalog : firms choose a price and a location in the consumer' space. Whereas there is no equilibrium in pure strategy for the simultaneous game, we show that an equilibrium always exists in a sequential competition. In this subgame perfect equilibrium the leader chooses a more specific product at a lower price than the follower. Thus the leader earns finally less than the follower. This introduces a tension between the temptation of attrition, which leads to an unstable configuration, and the will to guarantee a stricly positive profit.

Date: 2006
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Published in Revue Economique, 2006, 57 (3), pp.573-581

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Working Paper: Catalog competition in Hotelling's duopoly (2005)
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