Business, Management and Accounting
7 years ago

Firms intensify competition by strategically choosing product locations.

Scottish Journal of Political Economy
Location choices and third‐degree spatial price discrimination
Hong Feng, Jie Ma

Paper Summary

Firms choose how different their products are based on the sizes of consumer groups. If groups are similar, firms compete more on price. Only when one group is much bigger, firms make products as different as possible to charge different prices.

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