Spatial Competition In Quality

Author : Gustavo Jose Vicentini
Publisher :
ISBN 13 :
Total Pages : 118 pages
Book Rating : 4.:/5 (254 download)

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Download or read book Dynamic Spatial Competition Between Multi-product Oligopolists written by Gustavo Jose Vicentini and published by . This book was released on 2007 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: The dissertation provides a detailed study of the location strategy pursued by economic agents in space. The first chapter, "Spatial Pre-Emption by Chain Retailers: An Empirical Investigation," presents an empirical study of the location strategy pursued by multi-store retailers in an urban setting. Data were collected for the 1960-2002 period, on the location of chain supermarkets in the city of Greensboro, NC, and were merged with demographic variables from the Census Bureau. We estimate a discrete choice model where firms choose how many stores to open, their location; and which active stores to exit. We first investigate whether a retailer clusters its stores in space. We find that firms located new stores within proximity to their existing stores for most of the 1960-2002 period. Therefore, we empirically distinguish whether this is an attempt to crowd out the market from the competition (spatial pre-emption) or if cost considerations (spatial scope economies) were the reason. Spatial scope economies were relevant in the 1960-1980 period, but since then have lost importance. This indicates that pre-emptive behavior has increased in importance since 1980. We also test the model for robustness with respect to different geographic definitions of markets, and find that competition was more localized in the earlier half of the data. The second chapter, "Dynamic Spatial Competition Between Multi-Store Firms," proposes a dynamic model of an oligopoly industry characterized by spatial competition between multi-store firms. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations. The contribution of the paper is three-fold: first, we provide a dynamic framework to study such oligopoly industries; second, we provide an algorithm to compute the Markov Perfect Equilibria (MPE) of the model; third, we illustrate the model with numerical experiments that analyze the propensity of multi-store retailers to use spatial preemptive behavior. We find that spatial preemptive behavior depends on the level of sunk costs and of consumer transportation costs. The third chapter, "Public Education Provision and the Median Ideal Policy: Evidence from School Quality in Brazil," is based on spatial models of political competition, where political candidates choose their running platforms in the issue space. We study how the provision of public education quality is determined within a politically competitive framework. In particular, we investigate the validity of the median ideal policy theorem by analyzing how public education quality is influenced by the distribution of income in society. Using data from Brazil we analyze the relation between public education policies implemented by elected politicians and the local distribution of income. We then test whether these relationships are consistent with the median ideal policy of the local citizenry by estimating the sensitivity of public education policy to different percentiles of the distribution of income.