Are spatial differentiation and product differentiation substitutes?

Toshitaka Gokan and Jacques-François Thisse

No 943, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: We revisit the Hotelling model in the case of firms selling differentiated varieties. When product differentiation outweighs travel costs, the location-then-price game has a unique subgame perfect Nash quilibrium in which the two firms located at the market center.

Keywords: location|product; differentiation|agglomeration (search for similar items in EconPapers)
JEL-codes: D43 L13 R12 (search for similar items in EconPapers)
Date: 2024-10
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Published in IDE Discussion Paper = IDE Discussion Paper, No.943. 2024-10

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