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Product Location with Foresight

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Abstract

Traditional location literature concludes that firms will optimally differentiate in order to alleviate a tendency toward competitive pricing. However, it has recently been shown that firms will minimally differentiate if they (correctly) anticipate an absence of price competition. This paper examines the relationship between product location and the sustainability of cooperative pricing, in horizontally and vertically differentiated markets. Further, it describes equilibrium locations when firms are able to choose their locations jointly and when they must choose independently.

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Authors and Affiliations

  1. Department of Economics and Finance, Albers School of Business and Economics, Seattle University Seattle, Washington, 98122, U.S.A

    Timothy L. Sorenson

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  1. Timothy L. Sorenson
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Sorenson, T.L. Product Location with Foresight. Review of Industrial Organization 14, 281–292 (1999). https://doi.org/10.1023/A:1007725929850

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  • DOI: https://doi.org/10.1023/A:1007725929850

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