PIGA, C. and POYAGO-THEOTOKY, J., 2004. Endogenous R&D spillovers and locational choice with discriminatory pricing. Managerial and Decision Economics, 25 (3), pp.157-161.
We present a model of spatial price discrimination where R&D spillovers are endogenous as they depend on firms’ location. We establish that both the distance between locations and R&D efforts are an increasing function of the transportation cost coefficient and show that there is a continuum of cases where firms will choose an intermediate location. The managerial implications from the model are discussed using examples of marketing behavior by Internet retailers.