Price-sensitive demand and market entry

Yiquan Gu, Alexander Rasch, Tobias Wenzel

Research output: Contribution to journalArticle

2 Citations (Scopus)
147 Downloads (Pure)

Abstract

This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that compared to the socially optimal outcome, too few firms may enter when entry costs and transport costs are high.

Original languageEnglish
Pages (from-to)865-875
JournalPapers in Regional Science
Volume95
Issue number4
Early online date5 Mar 2015
DOIs
Publication statusPublished - Nov 2016

Keywords

  • Circular city
  • Horizontal product differentiation
  • L11
  • L13
  • Market entry
  • Price-sensitive demand

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