Why should a firm choose to limit the size of its market area?

Marco Alderighi, Claudio A. Piga

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We study when a monopolistically-competitive firm may optimally choose to limit the size of its market. This may be the case when the cost of serving the market with geographically dispersed customers is increasing in size. We also investigate the incentives faced by a firm to limit the reach of its market when it adopts two different pricing schemes. We show that under certain assumptions the derived equilibria are constrained socially optimal.

Original languageEnglish
Pages (from-to)191-201
Number of pages11
JournalRegional Science and Urban Economics
Volume38
Issue number2
DOIs
Publication statusPublished - 1 Mar 2008
Externally publishedYes

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