Price competition on graphs
Pim Heijnen () and
Adriaan Soetevent ()
Journal of Economic Behavior & Organization, 2018, vol. 146, issue C, 161-179
This paper extends Hotelling's model of price competition with quadratic transportation costs from a line to graphs. We derive an algorithm to calculate firm-level demand for any given graph, conditional on prices and firm locations. These graph models of price competition may lead to spatial discontinuities in firm-level demand. We show that the existence result of d’Aspremont et al. (1979) does not extend to graphs that cannot be reduced to a line or circle.
Keywords: Spatial competition; Hotelling; Graphs (search for similar items in EconPapers)
JEL-codes: D43 L10 R12 (search for similar items in EconPapers)
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Working Paper: Price Competition on Graphs (2014)
Working Paper: Price Competition on Graphs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:146:y:2018:i:c:p:161-179
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