Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
984614 | Research in Economics | 2009 | 15 Pages |
Abstract
In entering a new market, firms face demand uncertainty. We depart from the usual Hotelling duopoly model with sequential entry. We allow firms to locate outside of the city and assume that market conditions are common knowledge. We then introduce one-sided demand uncertainty. We find that demand uncertainty can be seen as a differentiation force when faced by the first entrant and as an agglomeration force when faced by the second entrant. Finally, the second firm’s imperfect information implies higher welfare losses.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Aurélie Bonein, Stéphane Turolla,