The role of consumer networks in firms’ multi-characteristics competition and market share inequality

We develop a location analysis spatial model of firms’ competition in multi-characteristics space, where consumers’ opinions about the firms’ products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products’ multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Proposing a dynamic agent-based analysis on firms’ location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms’ managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations.

GARAS Antonios;  LAPATINAS Athanasios; 

2017-09-22

ELSEVIER SCIENCE BV

JRC107750

0954-349X,   

https://authors.elsevier.com/sd/article/S0954349X17302412,    https://publications.jrc.ec.europa.eu/repository/handle/JRC107750,   

10.1016/j.strueco.2017.08.004,