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摘要
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We examine the location choice of a supplier and
the associated welfare in a straight line model where two markets of
different size exist on the two endpoints. There is a retailer in each market
who purchases goods from the only supplier charging either uniform or
discriminatory mill prices on the two retailers. The fixed cost incurred by
the retailers turns out to be crucial in determining the location of the supplier
and the associated welfare. It is found that under discriminatory pricing,
the supplier always locates in the big market. However, under uniform
pricing, when the market asymmetry is small, a higher fixed cost causes the
supplier to locate in an interior segment, and even at an interior point
somewhat biased to the small market if the fixed cost is high enough. In
addition, both total output and social welfare are higher under
discriminatory pricing. When the market asymmetry is large, a higher fixed
cost pushes the supplier towards the small market, even to the small market
if the fixed cost is high enough, moreover, total output may be smaller, but
social welfare is higher under discriminatory pricing.
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