<Para ID="Par1">This paper extends a model by Deneckere et al. (J Ind Econ 40:147–156, <CitationRef CitationID="CR2">1992</CitationRef>) to a multi-regional framework. It is assumed that some consumers are loyal to their respective regional firms, while others prefer the nationwide firm’s product. A third type of consumers is sensitive to price. With...</citationref></para>

Recent empirical studies on regional economic growth have extended regressions on convergence to account for externalities and spatial dependencies. Most of these studies, however, set the focus on whether regional output levels display convergence trends and consequently tend to ignore...