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A Unidirectional Hotelling Model

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  • Mohammed Kharbach

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    (HEC Montreal)

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    Abstract

    The standard hotelling model with linear transportation costs predicts an aggregation of the two competing firms in the middle of the customers support interval (Minimum Differentiation Principle). Using quadratic transportation costs, the two firms would locate in the opposite extremities of the interval (Maximum Differentiation Principle). Both cases assume bidirectional purchasing ability : a consumer can buy from a firm whether it is located on her right or on her left. In a situation where a consumer can buy only from firms located on her right (left), we show that one firm would locate at the right (left) end of the hotelling line while the other would locate at 3/5 (2/5) from the left end.

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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 29 (2009)
    Issue (Month): 3 ()
    Pages: 1814-1819

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    Handle: RePEc:ebl:ecbull:eb-09-00409

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    Related research

    Keywords: Hotelling; unidirectional; equilibrium; location;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Victor Ginsburgh & André De Palma & Yorgo Papageorgiou & Jacques-François Thisse, 1985. "The principle of minimum differentiation holds under sufficient heterogeneity," ULB Institutional Repository, ULB -- Universite Libre de Bruxelles 2013/1759, ULB -- Universite Libre de Bruxelles.
    2. FRIEDMAN, James W. & THISSE, Jacques-François, . "Partial collusion fosters minimum product differentiation," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1070, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Jehiel, Philippe, 1992. "Product differentiation and price collusion," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 10(4), pages 633-641, December.
    4. d'ASPREMONT, Claude & GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On Hotelling's "Stability in competition"," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -385, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:
    1. Stefano Colombo, 2013. "Spatial Cournot competition with non-extreme directional constraints," The Annals of Regional Science, Springer, Springer, vol. 51(3), pages 761-774, December.
    2. Takeshi Ebina & Daisuke Shimizu, 2012. "A unidirectional Hotelling model revisited," Economics Bulletin, AccessEcon, vol. 32(4), pages 2870-2875.
    3. Stefano Colombo, 2011. "Spatial price discrimination in the unidirectional Hotelling model with elastic demand," Journal of Economics, Springer, Springer, vol. 102(2), pages 157-169, March.
    4. Kai Andree, 2011. "Product differentiation and spatial agglomeration in a unidirectional Cournot model," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 4(3), pages 167-172, October.

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