Price Competition on Graphs

Pim Heijnen and Adriaan Soetevent

No 14-131/VII, 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. We derive an algorithm to calculate firm-level demand for any given graph, conditional on prices and firm locations. These graph models of price competition may lead to spatial discontinuities in firm-level demand. We show that the existence result of D'Aspremont et al. (1979) does not extend to simple star graphs and conjecture that this non-existence result holds more generally for all graph models with two or more firms that 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: 2014-10-02
New Economics Papers: this item is included in nep-com, nep-ind and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Price competition on graphs (2018)
Working Paper: Price Competition on Graphs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20140131

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