Mixed equilibrium in a pure location game: the case of n ≥ 4 firms

Christian Ewerhart

No 168, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: The Hotelling game of pure location allows interpretations in spatial competition, political theory, and professional forecasting. In this paper, the doubly symmetric mixed-strategy equilibrium for n ≥ 4 firms is characterized as the solution of a well-behaved boundary value problem. The analysis suggests that, in contrast to the cases n = 3 and n → ∞ , the equilibrium for a finite number of n ≥ 4 firms tends to overrepresent locations at the periphery of its support interval. Moreover, in the class of examples considered, an increase in the number of firms universally leads to a wider range of location choices and to a more dispersed distribution of individual locations. The results are used to comment on the potential benefit of competition in forecasting markets.

Keywords: Location; Hotelling game; mixed-strategy equilibrium; boundary value problem (search for similar items in EconPapers)
JEL-codes: C72 D43 D72 L13 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:168

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