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Price-sensitive demand and market entry

Yiquan Gu, Alexander Rasch, Tobias Wenzel

Open publisher page 45 citations

Abstract

Papers in Regional Science © 2015 RSAI This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that compared to the socially optimal outcome, too few firms may enter when entry costs and transport costs are high.

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Papers in Regional Science © 2015 RSAI This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that compared to the socially optimal outcome, too few firms may enter when entry costs and transport costs are high.

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Available abstract

Papers in Regional Science © 2015 RSAI This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that compared to the socially optimal outcome, too few firms may enter when entry costs and transport costs are high.

Key concepts: Outcome (game theory), Unit cost, Microeconomics, Product differentiation, Business, Industrial organization, Product (mathematics), Unit (ring theory)

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