Location decision of managerial firms in an unconstrained Hotelling model |
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Authors: | Leonard F S Wang Domenico Buccella |
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Institution: | 1. Zhongnan University of Economics and Law;2. Kozminski University |
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Abstract: | This paper applies an unconstrained Hotelling linear city model to study the effects of managerial delegation on the firms’ location/product differentiation level in a duopoly industry. It is shown that managerial delegation strongly affects firms’ location/product differentiation choice, both in the simultaneous and sequential moves in one of the three-stage location-incentive-pricing game structure of the model. While sequential moves in the location distance/quality differentiation stage decrease the distance among firms, sequential moves in the incentive-pricing stages increase it. The social welfare consequences are analysed. |
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Keywords: | duopoly firms’ locations managerial delegation spatial competition C72 D43 L13 |
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