A Game-Theoretic Analysis of Strategic Clustering by Retailers
نویسندگان
چکیده
We develop and estimate a spatial game-theoretic model of entry and location choices to examine firms’ strategic clustering decisions. The model identifies two contradictory effects that determine firms’ geographical location choices: a competition effect and a clustering effect. We also separate firm’s strategic clustering incentives from the observed clustering behavior due to exogenous factors such as population and topographic desirability or constraints. In particular, we examine two closely related industries that share similar location limitations but have different strategic incentives to cluster, jointly estimate the Bayesian Nash equilibrium of a two-industry entry/location game, and quantify the strategic clustering incentives. JEL Classifications: L13, L81, R12, R30 ∗Department of Economics, University of South Florida, Tampa, FL,USA. Email: [email protected]. †Department of Economics, University of South Florida, Tampa, FL,USA. Email: [email protected].
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