Firm entry, product repositioning and welfare

Arbeitspapier

We show that the entry of a second firm in a horizontally differentiated market (ala Hotelling) may harm consumers as prices increase and consumer's surplus possibly decrease. We first derive the price and the consumer's surplus of a monopoly which is located at the center of the market. When a second firm enters the market the first firm repositions and the two firms locate at their equilibrium points. Although competition adds to variety and increases consumer's surplus, the post entry increase in price may outweight the gains from extra variety and make consumers worse off.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: EERI Research Paper Series ; No. 17/2009

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Welfare Economics: General
• Thema: Horizontal di¤erentiation ; welfare analysis ; product repositioning

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Zacharias, Eleftherios
• Ereignis: Veröffentlichung
• (wer): Economics and Econometrics Research Institute (EERI)
• (wo): Brussels
• (wann): 2009

Weitere Informationen

• Handle: http://hdl.handle.net/10419/142549
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ