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Price-sensitive demand and market entry
OAI: oai:purehost.bath.ac.uk:publications/23d0c5f8-6189-4b2c-a811-62a7eb6cf712 • DOI: https://doi.org/10.1111/pirs.12165
Abstract
This paper revisits the optimal entry decision in a differentiated product market where customer demand is price-sensitive and depends on a per-unit transport cost. We show that compared to the socially optimal outcome, too few firms may enter when entry costs and transport costs are high.