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 language | English |
|---|---|
| Pages (from-to) | 865-875 |
| Journal | Papers in Regional Science |
| Volume | 95 |
| Issue number | 4 |
| Early online date | 5 Mar 2015 |
| DOIs | |
| Publication status | Published - Nov 2016 |
Keywords
- Circular city
- Horizontal product differentiation
- L11
- L13
- Market entry
- Price-sensitive demand