Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159241
Authors: 
Lambertini, Luca
Bertuzzi, Giorgia
Year of Publication: 
2001
Series/Report no.: 
Quaderni - Working Paper DSE 400
Abstract: 
We investigate a dynamic duopoly game with horizontal product differentiation, to show that the standard approach to spatial competition fails to produce a pure strategy equilibrium in prices when treated in a differential game framework. This holds independently of the shape of the transportation cost function. Then, we introduce an endogenous costs associated with the choice of location and characterize the open-loop and closed-loop equilibria of the model, showing that in the closed-loop case firms invest more in product differentiation and less in advertising, than they do in the open-loop setting. This happens because the gains from product differentiation can be more easily internalised than those associated with advertising.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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