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Journal of Applied Mathematics
Volume 2013, Article ID 426345, 6 pages
http://dx.doi.org/10.1155/2013/426345
Research Article

Spatial Competition with Entry Deterrence considering Horizontal Product Differentiations

Department of Economic Management, Guangzhou Institute of Railway Technology, Guangzhou 510430, China

Received 18 July 2013; Accepted 19 August 2013

Academic Editor: Pei-ai Zhang

Copyright © 2013 Ai-nong Zhou. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Spatial competition plays important roles in economics, which attracts extensive research. This paper addresses spatial competitions along with horizontal product differentiations and entry deterrence. By the dynamic game theory model about one firm and a potential entrant with different cost in a linear city, this paper finds that both the higher fixed setup cost and the higher transportation cost deter entrants. To efficiently deter the entrants, the establisher is inclined to locating at the middle point of the linear city.