RETAILER LOCATIONS, LOCAL SUPPLY AND PRICE POLICIES

Abstract

Two retailers operate in a monopsonistic, oligopolistic environment. They have to buy from spatially dispersed suppliers and use uniform pricing downstream. We characterize prices and location in the two-stage location-then-price game under two different pricing policies in the upstream market: uniform pricing and spatial price discrimination. We analyze how local supply conditions affect equilibrium locations and profits. We show that if retailers can choose a price policy initially they commit to uniform pricing in the upstream market.Spatial Competition; Intermediation; Uniform Pricing