Timing of entry and location/product differentiation. (June 2018)

• Record Type: Journal Article
• Authors: Sun, Chia‐Hung
• Is Part Of: International journal of economic theory. Volume 14:Number 2(2018:Jun.)
• Page Start: 179
• Page End: 200
• Publication Date: 2018-06
• Subjects: Hotelling model -- precommitment game -- preemption game -- timing game; Economics -- Periodicals; 330.01
• DOI: 10.1111/ijet.12151
• Languages: English
• ISSNs: 1742-7355

Abstract

Abstract : This research considers two alternative timing games, the precommitment game and the preemption game, where duopoly firms choose their respective timing of market entry and post‐entry profits are generated by price competition in a spatial model à la Hotelling (1929 ). We find that the time of first entry is increasing and the time of second entry is decreasing in location differentiation. The results are robust and valid both from an equilibrium analysis and from a welfare analysis. We also note that the difference in equilibrium entry times is too close from the viewpoint of social welfare.