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Spatial Competition with Interacting Agents

Bertrand Ottino-Loffler (), Forrest Stonedahl (), Vipin Veetil () and Uri Wilensky ()
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Bertrand Ottino-Loffler: Center for Applied Mathematics, Cornell University, Ithica, New York, U.S.A
Forrest Stonedahl: Department of Mathematics and Computer Science, Augustana College, Illinois, U.S.A.
Vipin Veetil: Department of Economics, Sorbonne University, Paris, France
Uri Wilensky: Center for Connected Learning and Computer-Based Modeling Northwestern Institute on Complex Systems, Northwestern University, Evanston, Illinois, U.S.A.

International Journal of Microsimulation, 2017, vol. 10, issue 3, 75-91

Abstract: Using agent-based modeling, we generalize Hotelling?s model of spatial competition with more than two firms in a two-dimensional space. Firms choose both price and location to maximize profits. The principle of minimum differentiation does not hold in general. Local duopolies emerge from the interaction betweenfirms. Firms do not spread uniformly across the two-dimensional space, nor do they all charge the same price. Firms in more competitive locations charge lower prices and generate less profit.

Keywords: HOTELLING; PRICE COMPETITION; AGENT-BASED MODELING (search for similar items in EconPapers)
JEL-codes: D21 D43 D83 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:ijm:journl:v10:y:2017:i:3:p:75-91