Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Saturday, April 10, 2010

Strategic Accessibility Competition

Posted by D. Daniel Sokol

E. Bacchiega, E. Randon and L. Zirulia (all University of Bologna - Econ) offer thoughts on Strategic Accessibility Competition.

ABSTRACT: We analyze the effect of competition in market-accessibility enhancement among quality-differentiated firms. Firms are located in regions with different ex-ante transport costs to reach the final market. We characterize the equilibrium of the two-stage game in which firms first invest to improve market accessibility and then compete in prices. Efforts in accessibility improvement crucially depend on the interplay between the willingness to pay for the quality premium of the median consumer and the ex-ante difference in accessibility between regions. From the social standpoint, all the accessibility investment should be carried out by the high-quality firm. Finally quality choice is endogenized.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/04/strategic-accessibility-competition.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef01347fba8216970c

Listed below are links to weblogs that reference Strategic Accessibility Competition:

Comments

Post a comment