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. Copyright © 2004 John Wiley & Sons, Ltd.
Endogenous R&D spillovers and locational choice with discriminatory pricing
Piga C.;
2004-01-01
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. Copyright © 2004 John Wiley & Sons, Ltd.
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