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 graphs that cannot be reduced to a line or circle.
Original language | English |
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Pages (from-to) | 161-179 |
Number of pages | 20 |
Journal | Journal of Economic Behavior & Organization |
Volume | 146 |
DOIs | |
Publication status | Published - Feb-2018 |
Keywords
- Spatial competition
- Hotelling
- Graphs
- DISCONTINUOUS ECONOMIC GAMES
- LOSCHIAN LOCATION MODEL
- RETAIL GASOLINE MARKET
- MONOPOLISTIC COMPETITION
- EDGEWORTH CYCLES
- EQUILIBRIUM
- EXISTENCE
- DIFFERENTIATION
- STABILITY
- OLIGOPOLY