Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190812 
Year of Publication: 
2018
Series/Report no.: 
University of Tübingen Working Papers in Economics and Finance No. 113
Publisher: 
University of Tübingen, Faculty of Economics and Social Sciences, Tübingen
Abstract: 
The paper studies a two-stage location-price duopoly game in a disk city with consumer concentration around the city center. When consumers are uniformly distributed over the plane, unconstrained firms locate outside of the city. Consumer concentration, however, induces firms to locate nearer to each other and, when the degree of concentration is sufficiently high, inside of the city. Prices and firm profits decrease in the degree of consumer concentration. We explicitly solve the model for classes of cone-shaped, dome-shaped, and bell-shaped consumer densities. In all cases we identify a loss of welfare due to the strategic effect which causes the firms' spatial differentiation being too large.
Subjects: 
location strategies
disk city
concentration of consumer demand
JEL: 
C72
L13
R32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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