I introduce non-perfect substitutability between products into the spatial Bertrand model. I show that if goods are complements, the firms always agglomerate. If goods are substitutes, the firms agglomerate if the transportation costs are not too high.
Colombo, S., Differentiated Bertrand markets: restoring the Minimum Differentiation Principle, <<LETTERS IN SPATIAL AND RESOURCE SCIENCES>>, 2013; 6 (2): 103-108. [doi:10.1007/s12076-012-0090-3] [http://hdl.handle.net/10807/40084]
Differentiated Bertrand markets: restoring the Minimum Differentiation Principle
Colombo, Stefano
2013
Abstract
I introduce non-perfect substitutability between products into the spatial Bertrand model. I show that if goods are complements, the firms always agglomerate. If goods are substitutes, the firms agglomerate if the transportation costs are not too high.
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