Competition When Consumers Value Firm Scope

Nathan Miller
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Nathan Miller: Economic Analysis Group, Antitrust Division, Department of Justice

No 200807, EAG Discussions Papers from Department of Justice, Antitrust Division

Abstract: I model multimarket competition when consumers value firm scope across markets. Such competition is surprisingly common – consumers in many industries prefer firms that operate in more geographic and/or product markets. I show that these preferences permit firms of differing scopes to coexist in equilibrium. Within markets, firms of greater scope have higher prices and market shares. I turn to the commercial banking industry for the empirical implementation. Structural estimation of the model firmly supports the assumptions on consumer preferences, and empirical predictions specific to the model hold in the data. The results suggest that theoretical model is empirically relevant.

Keywords: Firm Scope; Consumer Preferences; Multimarket Competition; Banks (search for similar items in EconPapers)
JEL-codes: G21 L11 L22 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2008-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:doj:eagpap:200807

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