Price competition on graphs

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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.
Originele taal-2English
Pagina's (van-tot)161-179
Aantal pagina's20
TijdschriftJournal of Economic Behavior & Organization
StatusPublished - feb-2018

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