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Location and Pricing Decisions of a MultiStore Monopoly in a Spatial Market

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Abstract:

Abstract. 

This article presents an analysis of location and pricing decisions of a monopolist about to open several stores in a compact geographical space. The number of stores is made endogenous by the introduction of fixed costs. A novel methodology is developed, by which the firm's location and price decisions are represented as continuous functions defined over the geographical space. This modeling artifact generates a negligible error but simplifies the solution considerably and allows the derivation of several intuitive results. Although the focus is on one‐dimensional markets, it is shown that the method can easily be adapted to two‐dimensional markets.

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.0022-4146.2004.00346.x

Affiliations: Canada Research Chair in Distribution Management, École des Hautes Études Commerciales, 3000 chemin de la Côte-Sainte-Catherine, Montreal, Canada

Publication date: August 1, 2004

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