Hybrid Competition under Fragmented Demand and Limited Consumer Choice

2026-06-11T12:05:25+03:00

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.

Препринты НИУ ВШЭ

Hybrid Competition under Fragmented Demand and Limited Consumer Choice