Robust Equilibria in Location Games
Berno Buechel () and
Nils Roehl ()
Additional contact information
Berno Buechel: University of Hamburg
Nils Roehl: University of Paderborn
Authors registered in the RePEc Author Service: Berno Büchel ()
No 58, Working Papers CIE from Paderborn University, CIE Center for International Economics
In the framework of spatial competition, two or more players strategically choose a location in order to attract consumers. It is assumed standardly that consumers with the same favorite location fully agree on the ranking of all possible locations. To investigate the necessity of this questionable and restrictive assumption, we model heterogeneity in consumers' distance perceptions by individual edge lengths of a given graph. A profile of location choices is called a ``robust equilibrium'' if it is a Nash equilibrium in several games which differ only by the consumers' perceptions of distances. For a finite number of players and any distribution of consumers, we provide a full characterization of all robust equilibria and derive structural conditions for their existence. Furthermore, we discuss whether the classical observations of minimal differentiation and inefficiency are robust phenomena. Thereby, we find strong support for an old conjecture that in equilibrium firms form local clusters.
Keywords: spatial competition; Hotelling-Downs; networks; graphs; Nash equilibrium; median; minimal differentiation (search for similar items in EconPapers)
JEL-codes: C72 D49 P16 D43 (search for similar items in EconPapers)
Pages: 27 pages
New Economics Papers: this item is included in nep-com, nep-geo, nep-gth, nep-mic and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Robust equilibria in location games (2015)
Working Paper: Robust Equilibria in Location Games (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pdn:ciepap:58
Access Statistics for this paper
More papers in Working Papers CIE from Paderborn University, CIE Center for International Economics Contact information at EDIRC.
Bibliographic data for series maintained by WP-WiWi-Info (). This e-mail address is bad, please contact .