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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/75

Title: Spatial duopoly under uniform delivered pricing when firms avoid turning customers away
Authors: Iozzi, Alberto
Keywords: spatial duopoly
uniform delivered price
rationing
Issue Date: Mar-2003
Publisher: CEIS
Series/Report no.: CEIS Tor Vergata Research Paper
11
Abstract: This paper studies a spatial duopoly under uniform delivered pricing when firms do not ration the supply of the good, thus extending to a spatial context the analysis of oligopolistic markets with no rationing. The paper shows the existence of the equilibrium in prices under different tie-breaking rules (TBR) and compare the features of the equilibria found under these rules, thereby allowing to highlight the importance of the choice of the TBR in studying these models. When consumers buy from the nearest firm in case of equal prices (efficient TBR), any symmetric price pair within a given range is a Nash equilibrium, with each firm serving exactly half of the market line. If demand in each local market is equally split between the firms charging the same price (random TBR), the only equilibrium price is the one that gives zero profits to each firm. The degree of competitiveness of the market crucially depends on the TBR. Under the efficient TBR, all (but one) price equilibria deliver ...
URI: http://ssrn.com/abstract=392102
http://hdl.handle.net/2108/75
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