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Price competition on graphs

Pim Heijnen () and Adriaan Soetevent ()

Journal of Economic Behavior & Organization, 2018, vol. 146, issue C, 161-179

Abstract: 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)
Date: 2018
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Related works:
Working Paper: Price Competition on Graphs (2014) Downloads
Working Paper: Price Competition on Graphs (2011) Downloads
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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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