We consider the strategic choice between product and logistic innovation in a spatial framework where consumers are distributed across a linear city and have different incomes depending on their location. Equilibria depend on the relative efficiency of product and logistic innovation and on the level of income inequality. In a single-plant duopoly, multiple equilibria where firms differentiate their strategy may arise. In particular, we show that, if income inequality is sufficiently low, the firm located close to poor residents might choose to increase quality (product innovation) whereas the rival might choose to reduce transportation costs (logistic innovation). We also consider a multiplant monopoly framework and a joint-venture set-up, finding the conditions for different innovation equilibria to arise. Finally, we find that a social planner should mimic the behaviour of the multi-plant monopolist.

Colombo, S., Filippini, L., The choice between product and logistic innovation in a spatial model, <<ECONOMIA E POLITICA INDUSTRIALE>>, 2019; (46): 609-627. [doi:10.1007/s40812-019-00116-y] [http://hdl.handle.net/10807/143348]

The choice between product and logistic innovation in a spatial model

Colombo, Stefano;Filippini, Luigi
2019

Abstract

We consider the strategic choice between product and logistic innovation in a spatial framework where consumers are distributed across a linear city and have different incomes depending on their location. Equilibria depend on the relative efficiency of product and logistic innovation and on the level of income inequality. In a single-plant duopoly, multiple equilibria where firms differentiate their strategy may arise. In particular, we show that, if income inequality is sufficiently low, the firm located close to poor residents might choose to increase quality (product innovation) whereas the rival might choose to reduce transportation costs (logistic innovation). We also consider a multiplant monopoly framework and a joint-venture set-up, finding the conditions for different innovation equilibria to arise. Finally, we find that a social planner should mimic the behaviour of the multi-plant monopolist.
Inglese
Colombo, S., Filippini, L., The choice between product and logistic innovation in a spatial model, <<ECONOMIA E POLITICA INDUSTRIALE>>, 2019; (46): 609-627. [doi:10.1007/s40812-019-00116-y] [http://hdl.handle.net/10807/143348]
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10807/143348
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 0
social impact