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Strategic delegation under spatial price discrimination
Author(s) -
Heywood John S.,
Wang Zheng
Publication year - 2016
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12115
Subject(s) - delegation , business , economics , management
This paper introduces strategic delegation into the traditional model of spatial price discrimination. We examine cases of both simultaneous and sequential location and find that delegating location choices to managers causes firms to move towards each other. This movement typically reduces social welfare. While exceptions exist for high cost convexity and for some cases of elastic demand, this reduction reverses the increase in welfare associated with delegation in common quantity games outside the spatial context.