The Welfare Effects of Location and Quality in Oligopoly
Luis C. Corchón
Universidad Carlos III de Madrid - Department of Economics
University of Mannheim
April 24, 2011
In this paper we argue that two important causes of welfare losses in oligopolistic markets have been neglected. We show that in models where location is endogenous, welfare losses arising from wrong locations or from lack of market coverage may be substantial despite firms competing in prices. In contrast, welfare losses arising from quality choice are modest but they might vary discontinuously with the size of the market.
Number of Pages in PDF File: 30
Keywords: Welfare losses, Horizontal differentiation, Hotelling model, Salop model, Vertical differentiation.
JEL Classification: D61, L11, L13, L50working papers series
Date posted: April 25, 2011 ; Last revised: November 14, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.266 seconds