L > \infty$ , we characterize the unique equilibrium and the socially optimal locations. Contrary to the individual-level random utility models, we find that uncertainty is a differentiation force. For small (large) sizes of the uncertainty, there is excessive (insufficient) differentiation. More uncertainty about consumer tastes can have positive or negative welfare effects, depending on the size of the uncertainty. Copyright Springer-Verlag Berlin/Heidelberg 2005"> L > \infty$ , we characterize the unique equilibrium and the socially optimal locations. Contrary to the individual-level random utility models, we find that uncertainty is a differentiation force. For small (large) sizes of the uncertainty, there is excessive (insufficient) differentiation. More uncertainty about consumer tastes can have positive or negative welfare effects, depending on the size of the uncertainty. Copyright Springer-Verlag Berlin/Heidelberg 2005">
[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v25y2005i4p799-818.html
   My bibliography  Save this article

Location-then-price competition with uncertain consumer tastes

Author

Listed:
  • Kieron Meagher
  • Klaus Zauner
Abstract
We investigate Hotelling’s duopoly game of location-then-price choices with quadratic transportation costs and uniformly distributed consumers under the assumption that firms are uncertain about consumer tastes. When the uncertainty has a uniform distribution on the closed interval $[-\frac{L}{2},\frac{L}{2}]$ , with $0 > L > \infty$ , we characterize the unique equilibrium and the socially optimal locations. Contrary to the individual-level random utility models, we find that uncertainty is a differentiation force. For small (large) sizes of the uncertainty, there is excessive (insufficient) differentiation. More uncertainty about consumer tastes can have positive or negative welfare effects, depending on the size of the uncertainty. Copyright Springer-Verlag Berlin/Heidelberg 2005

Suggested Citation

  • Kieron Meagher & Klaus Zauner, 2005. "Location-then-price competition with uncertain consumer tastes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 799-818, June.
    • Handle: RePEc:spr:joecth:v:25:y:2005:i:4:p:799-818
    DOI: 10.1007/s00199-004-0520-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00199-004-0520-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00199-004-0520-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:25:y:2005:i:4:p:799-818. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.