Equilibrium existence in the Hotelling model with convex production costs

Davide Dragone and Luca Lambertini ()

Regional Science and Urban Economics, 2020, vol. 84, issue C

Abstract: We revisit the spatial duopoly model à la Hotelling (1929), to show that, provided the parameter scaling marginal cost is sufficiently high, quadratic production costs guarantee equilibrium existence in presence of linear transportation costs and a uniform distribution, with minimum product differentiation and no undercutting. We also discuss the conditions under which partial coverage arises. Finally, we extend the duopoly game to generalise the condition for the existence of the pure-strategy equilibrium to a class of convex production cost functions.

Keywords: Horizontal differentiation; Spatial competition; Price competition; Equilibrium existence (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:84:y:2020:i:c:s0166046220302532

DOI: 10.1016/j.regsciurbeco.2020.103568

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