Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230463
Authors: 
Colombo, Stefano
Matsushima, Noriaki
Year of Publication: 
2019
Series/Report no.: 
ISER Discussion Paper No. 1056
Abstract: 
We consider the spatial competition between two traditional physical (or offline) retailers and an Internet (or online) retailer where the efficiency of the latter differs from that of the former. We assume consumers are heterogeneous across two dimensions: (i) the costs of traveling to either of the offline retailers and (ii) the costs of purchasing from the online retailer. Both dimensions depend on the spatial location of consumers and are independent of each other. We show that the online retailer maximizes its profit at an intermediate level of the consumer disutility of online purchase when its efficiency is low.
Subjects: 
e-commerce
game theory
horizontal differentiation
vertical differentiation
JEL: 
L13
D43
Document Type: 
Working Paper

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