Hybrid Competition under Fragmented Demand and Limited Consumer Choice
Аннотация
This work develops a tractable model of price competition in fragmented markets where consumers consider both local and distant varieties, with cross-regional purchases subject to stochastic costs. Global competition and full localization emerge as polar cases; hybrid competition is not merely intermediate and exhibits distinctive features such as an endogenous price ceiling and non-monotonic entry into the market under fragmentation. Equilibrium profits are ordered: localization yields the highest, global competition the lowest. The consumer surplus is ranked in the opposite direction. Our analysis also shows that trade liberalization can reduce market efficiency.
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Литература
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