Spatial Competition with Entry Deterrence considering Horizontal Product Differentiations

Spatial Competition with Entry Deterrence considering Horizontal Product Differentiations

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Spatial competition plays important roles in economics, which attracts extensive research.This paper addresses spatial competitions along with horizontal product differentiations and entry deterrence.By the dynamic game theory Foil model about one firm and a potential entrant with different cost in a linear city, this paper finds that both the higher fixed setup cost and the higher transportation cost deter entrants.

To efficiently deter the entrants, the establisher is inclined to locating at the middle Surcingles point of the linear city.