Price Competition on Graphs

Adriaan Soetevent

No 10-126/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper extends Hotelling's model of price competition with quadratic transportation costs from a line to graphs. I propose an algorithm to calculate firm-level demand for anygiven graph, conditional on prices and firm locations. These graph models of price competitionmay lead to spatial discontinuities in firm-level demand. I show that the existence resultof D'Aspremont et al. (1979) does not extend to simple star graphs and I conjecture thatthis non-existence result holds more generally for all graph models with two or more firmsthat cannot be reduced to a line or circle.

Keywords: spatial competition; Hotelling; graphs (search for similar items in EconPapers)
JEL-codes: D43 L10 R12 (search for similar items in EconPapers)
Date: 2010-12-13, Revised 2011-08-11
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Price competition on graphs (2018)
Working Paper: Price Competition on Graphs (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100126

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