This paper develops a game-theoretic spatial model featuring consumer heterogeneity in online vs. offline retailers’ spatial competition. We find that consumers’ browse-and-switch behavior intensifies the competition because both offline and online retailers’ price and profit decline when the behavior occurs, but it is not necessarily a threat to offline retailers especially when the product relates more closely to experience. We consider six equilibrium scenarios for different combinations of consumer behaviors when considering a hybrid retailer. The analysis taking consumer heterogeneity into consideration shows that the hybrid retailer operating both online and offline is not always the winner. Particularly, the business opportunity for the offline retailer lies in consumers’ willingness to pay in store, and whether the retailer launches an online store depends on the type of products and services provided.

中文翻译：

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消费者异质性和线上线下零售空间竞争

本文开发了一种博弈论空间模型，该模型以在线与线下零售商空间竞争中的消费者异质性为特征。我们发现消费者的浏览和切换行为加剧了竞争，因为当该行为发生时，线下和线上零售商的价格和利润都会下降，但不一定对线下零售商构成威胁，尤其是当产品与体验更紧密相关时。在考虑混合零售商时，我们考虑了针对不同消费者行为组合的六种均衡情景。考虑到消费者异质性的分析表明，在线和离线运营的混合零售商并不总是赢家。特别是线下零售商的商机在于消费者愿意在店内支付，