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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

邮发代号 80-978

Frontiers of Economics in China  2016, Vol. 11 Issue (3): 519-536   https://doi.org/10.3868/s060-005-016-0027-1
  本期目录
Spatial Competition and Lowest Price Commitment
Hao Wang()
National School of Development, Peking University, Beijing 100871, China
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Abstract

This paper suggests that credibly committing to the strictly lowest price can be profitable and self-fulfilling in a spatial price competition. Consumers live in multiple residential zones. Each zone has a store. Consumers incur heterogeneous transportation costs moving between two zones. When there is one store credibly committing to the strictly lowest price, there is a pure strategy equilibrium in which a discount store directly competes with all other stores. The discount store offers the lowest price, takes the largest market share, and makes more profits than the other stores. Moreover, the low price commitment is not binding in equilibrium, which implies that the commitment is self-fulfilling.

Key wordsconvenience store    discount store    low price commitment    spatial competition
出版日期: 2016-09-23
 引用本文:   
. [J]. Frontiers of Economics in China, 2016, 11(3): 519-536.
Hao Wang. Spatial Competition and Lowest Price Commitment. Front. Econ. China, 2016, 11(3): 519-536.
 链接本文:  
https://academic.hep.com.cn/fec/CN/10.3868/s060-005-016-0027-1
https://academic.hep.com.cn/fec/CN/Y2016/V11/I3/519
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