Costly Location in Hotelling Duopoly

Jeroen Hinloopen and Stephen Martin ()

No 13-101/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We introduce a cost of location into Hotelling’s (1929) spatial duopoly. We derive the general conditions on the cost-of-location function under which a pure strategy price-location Nash equilibrium exists. With linear transportation cost and a suitably specified cost of location that rises toward the center of the Hotelling line, symmetric equilibrium locations are in the outer quartiles of the line, ensuring the existence of pure strategy equilibrium prices. With quadratic transportation cost and a suitably specified cost of location that falls toward the center of the line, symmetric equilibrium locations range from the center to the end of the line.

Keywords: Horizontal product differentiation; spatial competition; cost of location (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 (search for similar items in EconPapers)
Date: 2013-07-30
New Economics Papers: this item is included in nep-com and nep-ure
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Costly location in Hotelling duopoly (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20130101

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