Spatial Competition in Credit Markets

Using Hotelling's two-stage model of spatial competition, we develop a lending model where the equilibrium outcome may be characterized by maximal differentiation - in contrast to Hotelling's model where firms have an incentive to reduce differentiation, as long as a pure-strategy price equilibrium exists. The difference is due to the specificities of banks' activities: banks perform independent tests to assess the credit-worthiness of their loan applicants, and thereby create a nongeographic customer heterogeneity. If banks are sufficiently pessimistic about the credit-worthiness of firms, they try to minimize the risk of default by moving away from the market centerBanking competition, Hotelling, information acquisition, credit-worthiness tests

Gewerbeflächenpolitik im Standortwettbewerb: Theorie und praktische Evidenz

Als wichtigstes Instrument der kommunalen Wirtschaftsförderung ist - mangels geeigneter und rechtlich zulässiger Alternativen - die Gewerbeflächenpolitik anzusehen. Welche Ziele verfolgen die Kommunen mit der Vergabe von Gewerbeflächen? Eine Befragung in 15 deutschen Großstädten gibt Aufschluß darüber, wie dieses Instrument von kommunalpolitischer Seite angewendet wird. Welchen Kriterien unterliegt die Gewerbeflächenvergabe? Wie ist die Gewerbeflächenpolitik aus ökonomischer Sicht zu beurteilen? --

Strategic Choice of Quality When Quality is Costly: The Persistence of the High-Quality Advantage

In a two-firm, two-stage model of vertical product differentiation, I show that for every convex fixed-cost function of quality, the firm that chooses the higher quality at the first stage earns the higher profits. The result holds for the pure-strategy equilibrium in the simultaneous-quality game, and it holds as well if firms choose their qualities in sequential order.

Price competition in markets with customer testing: the captive customer effect

Hotelling, Price competition, Testing, Mixed strategies, Iterated elimination of strictly dominated strategies, D83, G21, L13,