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Endogenous Spillovers and Locational Choice: The Case of Discriminatory Pricing
Managerial and Decision Economics (2004)
  • Claudio Piga, Loughborough University
  • Joanna Poyago-Theotoky, Loughborough University
Abstract

We present a model of spatial price discrimination where R&D spillovers are endogenous as they depend on firms' location. We establish that both the distance between locations and R&D efforts are an increasing function of the transportation cost coefficient and show that there is a continuum of cases where firms will choose an intermediate location. The managerial implications from the model are discussed using examples of marketing behavior by Internet retailers.

Publication Date
2004
Citation Information
Claudio Piga and Joanna Poyago-Theotoky. "Endogenous Spillovers and Locational Choice: The Case of Discriminatory Pricing" Managerial and Decision Economics Vol. 25 Iss. 3 (2004)
Available at: http://works.bepress.com/joanna_poyago_theotoky/12/