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Barnali Gupta
''Delivered Pricing, Positive Externalities and Firm Dispersion''
( 2008, Vol. 12 No.32 )
This note examines firm locations in a delivered pricing model with positive production externalities. We find that, quite counter intuitively, firms will disperse rather than move closer, when production externalities are positive and reciprocal. Furthermore, we see a divergence between the private and social optimal locations, which is in contrast to the coincidence of these locations in the standard delivered pricing model.
Keywords: Location dispersion
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Nov 11 2008 Manuscript Accepted : Nov 12 2008

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