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| Author: | Anderson, S. |
| Title: | Spatial competition and price leadership. |
| Journal: | International Journal of Industrial Organization
1987 : DEC, VOL. 5:4, p. 369-398 |
| Index terms: | OLIGOPOLY PRICE POLICY SPATIAL ECONOMICS |
| Language: | eng |
| Abstract: | A study of the spatial dimension as a means of endogenising the role of price leadership, using the Stackelberg price leader/follower framework for price and location equilibrium, where none exists under the original specification. The Hotelling model is analyzed by determining the reaction functions for firms. It is found that the outcome is asymmetric in terms of locations, prices and profits; with the first firm in the market enjoying higher profits than the subsequent entrant. The author opines the equilibrium is appealing as it corresponds to entry-deterring and monopoly solutions. The model is accompanied by equations and Figures. |
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