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A Duopoly Location Toolkit: Consumer Densities Which Yield Unique Spatial Duopoly Equilibria

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Author Info

  • Meagher Kieron J

    ()
    (University of New South Wales)

  • Teo Ernie G.S.

    ()
    (Nanyang Technological University)

  • Wang Wen

    ()
    (University of New South Wales)

Abstract

Anderson, Goeree and Ramer (1997) observe that although the Uniform consumer density is almost universally assumed in Hotelling style location games, it is more realistic to assume non-uniform distributions. Using Anderson et al.'s (1997) sufficient conditions for the existence of a unique pure strategy equilibrium, we extend the list of known distributions with characterised equilibria from two (Uniform and Triangular) to seven. Our extension includes the Normal and Logistic distributions which are commonly used in empirical research. We also analyse the effects of density choice on equilibrium outcomes. Holding the mean and dispersion of consumer tastes constant, we find that the Uniform distribution inflates differentiation effects.

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File URL: http://www.degruyter.com/view/j/bejte.2008.8.1/bejte.2008.8.1.1445/bejte.2008.8.1.1445.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 8 (2008)
Issue (Month): 1 (April)
Pages: 1-23

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Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:14

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Cited by:
  1. Michal Król, 2011. "Product differentiation decisions under ambiguous consumer demand and pessimistic expectations," The School of Economics Discussion Paper Series 1103, Economics, The University of Manchester.
  2. Meagher, Kieron J. & Zauner, Klaus G., 2011. "Uncertain spatial demand and price flexibility: A state space approach to duopoly," Economics Letters, Elsevier, vol. 113(1), pages 26-28, October.
  3. David E. Giles & Xiao Ling, 2011. "Bias Reduction for the Maximum Likelihood Estimator of the Parameters of the Generalized Rayleigh Family of Distributions," Econometrics Working Papers 1111, Department of Economics, University of Victoria.

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