Abstract

http://ssrn.com/abstract=998148
 
 

References (23)



 
 

Citations (27)



 


 



Price and Variety in the Spokes Model


Yongmin Chen


University of Colorado at Boulder - Department of Economics

Michael H. Riordan


Columbia University - Columbia Business School


Economic Journal, Vol. 117, No. 522, pp. 897-921, July 2007

Abstract:     
The spokes model of nonlocalised spatial competition provides a new analytical tool for differentiated oligopoly and a representation of spatial monopolistic competition. An increase in the number of firms leads to lower equilibrium prices when consumers have relatively high product valuations, but, surprisingly, to higher equilibrium prices for intermediate consumer valuations. New entry alters consumer and social welfare through price, market expansion, and matching effects. With free entry, the market may provide too many or too few varieties from a social welfare perspective, and the equilibrium price remains above marginal cost even when the number of firms is arbitrarily large.

Number of Pages in PDF File: 25

Accepted Paper Series


Date posted: July 8, 2007  

Suggested Citation

Chen, Yongmin and Riordan, Michael H., Price and Variety in the Spokes Model. Economic Journal, Vol. 117, No. 522, pp. 897-921, July 2007. Available at SSRN: http://ssrn.com/abstract=998148 or http://dx.doi.org/10.1111/j.1468-0297.2007.02063.x

Contact Information

Yongmin Chen (Contact Author)
University of Colorado at Boulder - Department of Economics ( email )
Campus Box 256
Boulder, CO 80309-0256
United States
303-492-8736 (Phone)
303-492-8960 (Fax)
Michael H. Riordan
Columbia University - Columbia Business School ( email )
3022 Broadway
New York, NY 10027
United States
212-854-6984 (Phone)
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References:  23
Citations:  27

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