---
_id: '44093'
abstract:
- lang: eng
  text: We consider a model where for-profit providers compete in quality in a price-regulated
    market that has been opened to competition, and where the incumbent is located
    at the center of the market, facing high costs of relocation. The model is relevant
    in markets such as public health care, education and schooling, or postal services.
    We find that, when the regulated price is low or intermediate, the entrant strategically
    locates towards the corner of the market to keep the incumbent at the low monopoly
    quality level. For a high price, the entrant locates at the corner of the market
    and both providers implement higher quality compared to a monopoly. In any case,
    the entrant implements higher quality than the incumbent provider. Social welfare
    is always higher in a duopoly if the cost of quality is low. For higher cost levels
    welfare is non-monotonic in the price and it can be optimal to the regulator not
    to use its entire budget. Therefore, the welfare effect of entry depends on the
    price and the size of the entry cost, and the regulator should condition the decision
    to allow entry on an assessment of the entry cost.
author:
- first_name: Burkhard
  full_name: Hehenkamp, Burkhard
  id: '37339'
  last_name: Hehenkamp
- first_name: Oddvar M.
  full_name: Kaarbøe, Oddvar M.
  last_name: Kaarbøe
citation:
  ama: Hehenkamp B, Kaarbøe OM. <i>Price Regulation, Quality Competition and Location
    Choice with Costly Relocation</i>.
  apa: Hehenkamp, B., &#38; Kaarbøe, O. M. (n.d.). <i>Price Regulation, Quality Competition
    and Location Choice with Costly Relocation</i>.
  bibtex: '@book{Hehenkamp_Kaarbøe, title={Price Regulation, Quality Competition and
    Location Choice with Costly Relocation}, author={Hehenkamp, Burkhard and Kaarbøe,
    Oddvar M.} }'
  chicago: Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality
    Competition and Location Choice with Costly Relocation</i>, n.d.
  ieee: B. Hehenkamp and O. M. Kaarbøe, <i>Price Regulation, Quality Competition and
    Location Choice with Costly Relocation</i>. .
  mla: Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality Competition
    and Location Choice with Costly Relocation</i>.
  short: B. Hehenkamp, O.M. Kaarbøe, Price Regulation, Quality Competition and Location
    Choice with Costly Relocation, n.d.
date_created: 2023-04-20T17:12:18Z
date_updated: 2023-04-20T17:16:24Z
department:
- _id: '280'
- _id: '475'
jel:
- D43
- L13
- L51
keyword:
- Quality competition
- Price regulation
- Location choice
- Product differentiation
language:
- iso: eng
project:
- _id: '1'
  name: 'SFB 901: SFB 901'
- _id: '2'
  name: 'SFB 901 - A: SFB 901 - Project Area A'
- _id: '7'
  name: 'SFB 901 - A3: SFB 901 - Subproject A3'
publication_status: submitted
status: public
title: Price Regulation, Quality Competition and Location Choice with Costly Relocation
type: report
user_id: '37339'
year: '2023'
...
---
_id: '44091'
abstract:
- lang: eng
  text: We study the effects of product differentiation on the bundling incentives
    of a two-product retailer. Two monopolistic manufacturers each produce a differentiated
    good. One sells it to both retailers, while the other only supplies a single retailer.
    Retailers compete in prices. Retail bundling is profitable when the goods are
    close substitutes. Only then is competition so intense that the retailer uses
    bundling to relax competition both within and across product markets, despite
    an aggravation of the double marginalization problem. Our asymmetric market structure
    arises endogenously for the case of close substitutes. In this case, bundling
    reduces social welfare.
author:
- first_name: Angelika Elfriede
  full_name: Endres-Fröhlich, Angelika Elfriede
  id: '48794'
  last_name: Endres-Fröhlich
- first_name: Burkhard
  full_name: Hehenkamp, Burkhard
  id: '37339'
  last_name: Hehenkamp
- first_name: Joachim
  full_name: Heinzel, Joachim
  last_name: Heinzel
citation:
  ama: Endres-Fröhlich AE, Hehenkamp B, Heinzel J. <i>The Impact of Product Differentiation
    on Retail Bundling in a Vertical Market</i>.
  apa: Endres-Fröhlich, A. E., Hehenkamp, B., &#38; Heinzel, J. (n.d.). <i>The Impact
    of Product Differentiation on Retail Bundling in a Vertical Market</i>.
  bibtex: '@book{Endres-Fröhlich_Hehenkamp_Heinzel, title={The Impact of Product Differentiation
    on Retail Bundling in a Vertical Market}, author={Endres-Fröhlich, Angelika Elfriede
    and Hehenkamp, Burkhard and Heinzel, Joachim} }'
  chicago: Endres-Fröhlich, Angelika Elfriede, Burkhard Hehenkamp, and Joachim Heinzel.
    <i>The Impact of Product Differentiation on Retail Bundling in a Vertical Market</i>,
    n.d.
  ieee: A. E. Endres-Fröhlich, B. Hehenkamp, and J. Heinzel, <i>The Impact of Product
    Differentiation on Retail Bundling in a Vertical Market</i>. .
  mla: Endres-Fröhlich, Angelika Elfriede, et al. <i>The Impact of Product Differentiation
    on Retail Bundling in a Vertical Market</i>.
  short: A.E. Endres-Fröhlich, B. Hehenkamp, J. Heinzel, The Impact of Product Differentiation
    on Retail Bundling in a Vertical Market, n.d.
date_created: 2023-04-20T16:21:28Z
date_updated: 2023-04-20T17:15:48Z
department:
- _id: '280'
- _id: '475'
jel:
- D43
- L13
- L42
keyword:
- Retail bundling
- upstream market power
- double marginalization
- product differentiation
language:
- iso: eng
page: '43'
project:
- _id: '1'
  name: 'SFB 901: SFB 901'
- _id: '2'
  name: 'SFB 901 - A: SFB 901 - Project Area A'
- _id: '7'
  name: 'SFB 901 - A3: SFB 901 - Subproject A3'
publication_status: draft
status: public
title: The Impact of Product Differentiation on Retail Bundling in a Vertical Market
type: report
user_id: '37339'
year: '2022'
...