| By: |
Fall, François;
Nguyen-Huu, Thanh Tam |
| Abstract: |
In Hotelling's fundamental model (1929), the geographical distance and high
transportation costs grant firms present in a market a certain power over
local buyers in their neighborhoods. Starting from his model, this study shows
that in the competition between a bank and a microfinance institution (MFI),
geographical distance and transportation costs alone are no longer sufficient
for attributing market power to the firms present. In fact, the introduction
of psychological distance and education level in the model alter the
Hotelling's results. Psychological proximity (trust) and the educational level
of the client play determinant roles in dividing the credit market between a
bank and an MFI. |
| Keywords: |
spatial competition,bank,microfinance,market power |
| JEL: |
G21 O17 C72 D43 |
| Date: |
2015 |
| URL: |
http://d.repec.org/n?u=RePEc:zbw:ifwedp:201566&r=mfd |