The Hotelling Model

Stefano Colombo ()
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Stefano Colombo: Università Cattolica del Sacro Cuore

Chapter Chapter 1 in Spatial Economic Modelling, 2025, pp 1-25 from Springer

Abstract: Abstract In this chapter, the basic Hotelling model (Hotelling in Econ J 39:41–57, 1929) is presented. First, the assumptions of the model are critically discussed. Then, the model is solved for the case of exogenous firms’ locations at the endpoints of the market and for the case of endogenous locations and quadratic transportation costs. In the latter case, it is shown that the firms tend to maximally differentiate in equilibrium in order to reduce price competition. The case of endogenous locations and linear transportation costs is also discussed: in this case, there is not an equilibrium in location and prices.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-82787-7_1

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DOI: 10.1007/978-3-031-82787-7_1

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