Spatial equilibrium in a duopoly under asymmetric network externalities
by Tiina Heikkinen
International Journal of Operational Research (IJOR), Vol. 23, No. 3, 2015

Abstract: Network externalities are present in a variety of applications of spatial and network economics. For example, in energy networks the consumers often are assumed to benefit from a large number of other households using the same type of energy. In general, different firms can be asymmetric in terms of their network externality effect. This paper addresses the role of asymmetric network externalities to the existence and nature of spatial equilibrium in a duopoly with a quadratic transport cost. The study is based on a discrete choice Hotelling-type model where non-cooperative suppliers decide on prices and locations. The model has a pure strategy subgame-perfect equilibrium with maximal differentiation for a wide range of the parameter values of the asymmetric (or symmetric) network externalities. The model is applied to study equilibrium in an energy market consisting of a non-renewable energy producer and a renewable energy producer.

Online publication date: Fri, 29-May-2015

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Operational Research (IJOR):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com