Competitive Strategies for Multi-Establishment Firms

Abstract

I present an address model for the analysis of competition between multi-establishment firms that are organized according to a strict M-form structure. I investigate the structure of their equilibrium configurations in a family of scenarios where the location and value offering of establishments are modifiable but their number is fixed. The focus is on the forces that guide firms' competitive behavior and on the sensitivity of equilibrium solutions to various influences, such as people's willingness to accept discontent in shopping activities, the relative size of competitors' networks of outlets, and the total number of outlets serving the market. Of particular interest is the parallel between a traditional retail system based on single-outlet retailers and a contemporary system based on competing networks. In this respect, a major conclusion is that retail systems based on competing networks may have a number of features in common with a system organized around singleestablishment firms. They almost perfectly mirror each other whenever the networks are not too dissimilar in size.