The role of consumer networks in firms' multi-characteristics competition and market share inequality
Authored by Antonios Garas, Athanasios Lapatinas
Date Published: 2017
DOI: 10.1016/j.strueco.2017.08.004
Sponsors:
European Union
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Abstract
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. (C)
2017 The Authors. Published by Elsevier B.V.
Tags
Agent-based model
Uncertainty
behavior
Innovation
Dynamics
networks
Decision-Making
Model
preferences
Search
location choice
Demand
Political competition
Multi-characteristics space consumer
behavior
Decision heuristics
Consideration set formation