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arXiv · 1601.05660

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

Antonios Garas·Athanasios Lapatinas
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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.

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Antonios Garas, Athanasios Lapatinas. 2016-01-21. The role of consumer networks in firms' multi-characteristics competition and market-share inequality. https://arxiv.org/abs/1601.05660

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