Capacity constrained price competition with transportation costs

Johannes Muthers and Matthias Hunold

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: We characterize mixed-strategy equilibria in case of capacity constrained price competition, transportation costs and customer-specific pricing. Equilibrium prices weakly increase in the distance between supplier and customer. Despite prices above costs and excess capacities, the firms exclusively their serve home markets. Competition yields volatile market shares and an inefficient allocation of more distant customers to suppliers. Even ex-post subcontracts may restore efficiency only partly.

JEL-codes: L11 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168248

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