Competition Between Offline and Online Retailers with Heterogeneous Customers

Stefano Colombo, Noriaki Matsushima

Research output: Contribution to journalArticle

3 Citations (Scopus)


We consider the spatial competition between two traditional physical (or offline) retailers and an Internet (or online) retailer where the efficiency of the latter differs from that of the former. We assume that consumers are heterogeneous across two dimensions: (1) the costs of traveling to either of the offline retailers; and (2) the costs of purchasing from the online retailer. Both dimensions depend on the spatial location of consumers and are independent of each other. We show that the online retailer maximizes its profit at an intermediate level of the consumer disutility of online purchase when its efficiency is low.
Original languageEnglish
Pages (from-to)647-664
Number of pages18
JournalReview of Industrial Organization
Publication statusPublished - 2020


  • E-commerce
  • Game theory
  • Horizontal differentiation
  • Vertical differentiation


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