Hotelling’s competition with relative performance evaluation

Zonglai Kou and Min Zhou

Economics Letters, 2015, vol. 130, issue C, 69-71

Abstract: This paper studies the impact of relative performance evaluation (RPE) on the equilibrium locations in a Hotelling model with quadratic transportation cost. It is shown that equilibrium location varies from maximum differentiation to minimum differentiation, depending upon the relative strength of the RPE effect over the competition effect. Moreover, social welfare is greater with than without RPE.

Keywords: Spatial competition; Maximum (minimum) differentiation; Relative performance evaluation (search for similar items in EconPapers)
JEL-codes: L1 L2 R1 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:130:y:2015:i:c:p:69-71

DOI: 10.1016/j.econlet.2015.02.011

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