Monopolistic Duopoly

Emanuele Bacchiega (), Elias Carroni and Alessandro Fedele
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Emanuele Bacchiega: Department of Computer Science and Engineering, University of Bologna, Italy

No BEMPS101, BEMPS - Bozen Economics & Management Paper Series from Faculty of Economics and Management at the Free University of Bozen

Abstract: We delve into the Hotelling price competition game without assuming full market coverage, and derive three equilibrium configurations. Two of them are well-known: Hotelling duopoly, where firms set the prices with the aim of stealing customers from the rival, and the market is fully covered; Local Monopolies, where firms avoid strategic interaction and business stealing, and the market is partially covered. In the third, firms interact strategically to keep the market covered, while at the same time avoiding business stealing; we define it as Monopolistic Duopoly (MD) because it combines the characterizing features of the other two scenarios. Despite the existence of few contributions on MD, this equilibrium configuration has been substantially ignored. By spelling out the economics of MD and applying its intriguing properties to recent issues, we establish that MD has, instead, relevant implications for the Hotelling literature.

Keywords: Hotelling Price Competition Game; Market Coverage; Monopolistic Duopoly. (search for similar items in EconPapers)
JEL-codes: C72 D21 L13 (search for similar items in EconPapers)
Pages: [34 pages]
Date: 2023-09
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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