Location-price equilibria when traditional retailers compete against an online retailer

Stefano Colombo, Zemin Hou

Research output: Contribution to journalArticle

Abstract

We consider a location-then-price game where two traditional retailers compete with a location-irrelevant online retailer. We characterize the existing equilibria, and we show that in any possible equilibrium there is direct competition between the traditional retailers. Furthermore, the traditional retailers locate at neither a maximal nor minimal distance. In equilibrium, the price of the online retailer might be higher or lower than the price of the traditional retailers, depending on the relative competitiveness of the online retailer and the traditional retailers.
Original languageEnglish
Pages (from-to)483-502
Number of pages20
JournalReview of Industrial Organization
Publication statusPublished - 2021

Keywords

  • Hotelling

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