Differentiation on Main Street: Two topics in location theory
Gray, Richard
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Cite this item:
Gray, R. (2002, October). Differentiation on Main Street: Two topics in location theory (Dissertation, Bachelor of Commerce with Honours). Retrieved from http://hdl.handle.net/10523/1163
Permanent link to OUR Archive version:
http://hdl.handle.net/10523/1163
Abstract:
Two topics are examined in the convex cost specification introduced by d'Aspremont et al. (1979) into the model of Hotelling (1929). The first topic introduces a finite reservation constraint and demonstrates that the maximal differentiation result of d'Aspremont et al. (1979) is a special case which holds only if the constraint is sufficiently high. The second topic demonstrates that the use of a convex cost function creates the existence of a unique subgame-perfect
Nash equilibrium in pure-strategies with three firms in a finite linear interval, and so reconciles an outstanding theoretical anomaly. The welfare consequences of this equilibrium are considered. In a limited analysis the second topic also examines possible locational pre-emption strategies as a finite reservation constraint is introduced, suggesting that the reservation value of a product is perhaps relevant in a firm's ideal location commitment.
Date:
2002-10
Degree Name:
Bachelor of Commerce with Honours
Degree Discipline:
Economics
Pages:
59
Keywords:
convex cost specification; finite reservation constraint; maximal differentiation result; convex cost function; Nash equilibrium,
Research Type:
Dissertation
Collections
- Economics [318]
- Dissertation - Honours [188]