Price-sensitive demand and market entry

Yiquan Gu, Alexander Rasch and Tobias Wenzel

No 165, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that too few firms may enter for high entry cost and high transport cost compared to the socially optimal outcome.

Keywords: Circular city; Horizontal product differentiation; Market entry; Price-sensitive demand (search for similar items in EconPapers)
JEL-codes: L11 L13 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-ind and nep-tre
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https://www.econstor.eu/bitstream/10419/103374/1/800327349.pdf (application/pdf)

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Journal Article: Price-sensitive demand and market entry (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:165

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