Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229508
Authors: 
Bourreau, Marc
Manenti, Fabio M.
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8690
Abstract: 
We develop a model of strategic geoblocking, where two competing multi-channel retailers, located in different countries, can decide to block access to their online store from foreign consumers. We characterize the equilibrium when firms decide unilaterally whether to introduce geoblocking restrictions. We show that geoblocking results in a “puppy dog” strategy (Fudenberg and Tirole, 1984) for firms, which allows them to soften competition, but that it comes at the cost of lower demand. In the short term, a ban on geoblocking leads to lower prices, both offline and online. However, in the longer term, when firms can invest in increasing the demand from online shoppers, the ban may have adverse effects on investment and social welfare. We extend our analysis to account for price discrimination and investigate the role of shipping costs.
Subjects: 
cross-border sales
geoblocking
e-commerce
investment
JEL: 
L13
L41
L81
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.