Nonlinear pricing in spatial oligopoly |
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Authors: | Jonathan H Hamilton Jacques-François Thisse |
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Institution: | (1) Department of Economics, Warrington College of Business Administration, University of Florida, 32611 Gainesville, FL, USA;(2) CORE, Université Catholique de Louvain, 34 voie du Roman Pays, 1348 Louvain-la-Neuve, Belgium;(3) CERAS, Ecole Nationale des Ponts et Chaussées, 28 rue des Saints-Pères, 75343 Paris cedex 08, France |
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Abstract: | A model of duopoly competition in nonlinear pricing when firms are imperfectly informed about consumer locations is analyzed.
A continuum of consumers purchase a variable amount of a product from one of two firms located at the endpoints of the market.
At the Nash equilibrium in quantity-outlay schedules, consumers buy the same quantities as they would from the same firm if
it were a monopolist facing the same informational asymmetries, but they receive greater surplus. Hence, no efficiency gains
result from competition. If consumers have the option to reveal their locations and have the firms deliver the goods, all
consumers choose to reveal their locations in equilibrium. Thus, the inefficiencies from information asymmetries may not arise
because firms can deliver the good to consumers. In contrast, with a monopoly seller, consumers have no incentives to reveal
their locations. |
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Keywords: | D43 D82 C72 L42 |
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