Elastic Demand Functions

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

Chapter Chapter 3 in Spatial Economic Modelling, 2025, pp 47-61 from Springer

Abstract: Abstract In this chapter, I consider the Hotelling model by assuming that each consumer is characterized by a continuously decreasing demand function (elastic demand function) rather than by a unit demand function. First, I show that when the two firms cannot price discriminate, the Hotelling model with elastic demand functions is not easy to manage, and the equilibrium outcome cannot be characterized explicitly. Then, I assume that firms can set different quantities (spatial Cournot competition) or different prices (spatial Bertrand competition) at different locations. I find the equilibrium in each of the two cases, and I compare them.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-82787-7_3

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DOI: 10.1007/978-3-031-82787-7_3

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