Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations

Ebina, Takeshi; Matsushima, Noriaki

Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations

Ebina, Takeshi; Matsushima, Noriaki

Institute of Social and Economic Research Discussion Papers, 2017, 1009, 1-38

Number of Access:308（2025-07-24 04:18 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/62272

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Title	Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations
Creator	NRID 1000000579766 1000000579766 CreatorName Ebina, Takeshi
Creator	NRID 1000080334879 1000080334879 ORCID 0000-0002-7865-3875 0000-0002-7865-3875 researchmap permalink read0116301 read0116301 Scopus Author ID 7005645778 7005645778 CreatorName Matsushima, Noriaki
Subject	Entry timing
	Hotelling model
	Vertical relations
	Continuous-time model
	Nash bargaining
Abstract	We study the entry timing and location decisions of two exclusive buyer-supplier relationships in a continuous-time spatial competition model. In each relationship, the firms determine their entry timing and location, and negotiate a wholesale price through Nash bargaining. Then, the downstream firm immediately determines its retail price. Our findings are as follows. Ordinarily, if the supplier of the first entrant (called the leader pair) has strong bargaining power, the equilibrium location of the leader will be closer to the center, inducing a delay in entry by the second entrant (called the follower pair). This delay implies the stronger bargaining power of the supplier in the leader pair can also benefit the buyer of the pair. The location of the leader pair can change non-monotonically with an increase in the supplier's bargaining power, which has a substantial impact on the entry timing of the follower pair. However, the greater the bargaining power of the supplier in the follower pair, the closer the leader pair will be to the edge. This implies that having greater bargaining power will enhance the profitability of the supplier in the follower pair.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	1009
Page	1-38
Date of Issued	2017-08
Language	English
Handle URL	https://hdl.handle.net/11094/62272
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1009.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2017, 1009, p. 1-38
DC.title	Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations
DC.creator	Ebina, Takeshi
DC.creator	Matsushima, Noriaki
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2017-08
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1009.pdf
DC.subject	Entry timing
	Hotelling model
	Vertical relations
	Continuous-time model
	Nash bargaining
DCTERMS.abstract	We study the entry timing and location decisions of two exclusive buyer-supplier relationships in a continuous-time spatial competition model. In each relationship, the firms determine their entry timing and location, and negotiate a wholesale price through Nash bargaining. Then, the downstream firm immediately determines its retail price. Our findings are as follows. Ordinarily, if the supplier of the first entrant (called the leader pair) has strong bargaining power, the equilibrium location of the leader will be closer to the center, inducing a delay in entry by the second entrant (called the follower pair). This delay implies the stronger bargaining power of the supplier in the leader pair can also benefit the buyer of the pair. The location of the leader pair can change non-monotonically with an increase in the supplier's bargaining power, which has a substantial impact on the entry timing of the follower pair. However, the greater the bargaining power of the supplier in the follower pair, the closer the leader pair will be to the edge. This implies that having greater bargaining power will enhance the profitability of the supplier in the follower pair.
DC.format	62272
citation_title	Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations
citation_author	Ebina, Takeshi
citation_author	Matsushima, Noriaki
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2017-08
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	1009
citation_firstpage	1
citation_lastpage	38
citation_public_url	https://hdl.handle.net/11094/62272
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2017/DP1009.pdf

Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations

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