SFB 303 Discussion Paper No. A - 73

Author: Bester, Helmut
Title: Non-Cooperative Bargaining and Spatial Competition
Abstract: The paper presents a bargaining approach to spatial competition. Sellers compete by choosing locations in a market region. Consumers face a cost to moving from one place to another. The price of the good is determined as the perfect equilibrium of a bargaining game between seller and buyer. In this game, the consumer has the outside option to move to another seller so that prices at all stores are independent. Existence of a location - price equilibrium is established. The outcome approaches the perfectly competitive one if the consumer`s cost of travelling become negligible or if the number of sellers tends to infinity.
Keywords: bargaining, spatial competition
JEL-Classification-Number:
Creation-Date: August 1986
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