Hotelling's Beach with Linear and Quadratic Transportation Costs: Existence of Pure Strategy Equilibria

Alain Egli

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: In Hotelling type models consumers have the same transportation cost function. We deviate from this assumption and introduce two consumer types. Some consumers have linear transportation costs, while the others have quadratic transportation costs. If at most half the consumers have linear transportation costs, a subgame perfect equilibrium in pure strategies exists for all symmetric locations. Furthermore, no general principle of differentiation holds. With two consumer types, the equilibrium pattern ranges from maximum to intermediate differentiation. The degree of product differentiation depends on the fraction of consumer types

Keywords: Hotelling; Horizontal Product Differentiation; Equilibrium (search for similar items in EconPapers)
JEL-codes: L13 R32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ure
Date: 2005-05
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Persistent link: http://EconPapers.repec.org/RePEc:ube:dpvwib:dp0509

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