PRODUCT LOCATION WITH FORESIGHT

Traditional location literature concludes that firms will optimally di fferentiate in order to alleviate a tendency toward competitive pricin g. However, it has recently been shown that firms will minimally diffe rentiate if they (correctly) anticipate an absence of price competitio n. This paper examines the relationship between product location and t he sustainability of cooperative pricing, in horizontally and vertical ly differentiated markets. Further, it describes equilibrium locations when firms are able to choose their locations jointly and when they m ust choose independently.