Strategic location decisions in a growing market

The optimal location and time of entry are examined in a horizontally diffe rentiated market using a simple duopoly model with sequential entry. Assumi ng high entry and relocation costs, we find that (1) the late entrant alway s locates in the periphery (maximum differentiation), (2) the first entrant will choose either a peripheral location or a central location (minimum di fferentiation) but not an intermediate location, (3) the choice of a centra l location is optimal when the effectiveness of entry deterrence is enhance d by low transportation costs, high interest rates, high fixed costs and a low market growth rate. (C) 2001 Elsevier Science B.V. All rights reserved.