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Equilibrium in Hotelling's Model of Spatial Competition

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Author Info
Osborne, Martin J
Pitchik, Carolyn

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Abstract

A partly analytical, partly computational approach is used to study mixed strategy equilibria of Hotelling's model of sp atial competition in which each of two firms chooses a location in a line segment and a price. There is a unique (up to symmetry) subgame perfect equilibrium in which the locations choices are pure. In it, t he locations are close to the quartiles of the market, and the suppor t of the equilibrium mixed-price strategy of each firm is the union o f two short intervals. There is also a subgame perfect equilibrium in which the firms randomize over locations. Copyright 1987 by The Econometric Society.

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Publisher Info
Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 55 (1987)
Issue (Month): 4 (July)
Pages: 911-22
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Handle: RePEc:ecm:emetrp:v:55:y:1987:i:4:p:911-22

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References listed on IDEAS
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.:
  1. Paul Milgrom & Robert Weber, 1981. "Distributional Strategies for Games with Incomplete Information," Discussion Papers 428R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  2. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September. [Downloadable!] (restricted)
  3. Osborne, Martin J. & Pitchik, Carolyn, 1983. "Price Competition in a Capacity-Constrained Duopoly," Working Papers 83-08, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. María Pérez & Pascual Hernández & Blas Pelegrín, 2004. "On price competition in location-price models with spatially separated markets," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, vol. 12(2), pages 351-374, December. [Downloadable!] (restricted)
  2. Giuseppe Moscarini & Marco Ottaviani, 1998. "Price Competition for an Informed Buyer," Cowles Foundation Discussion Papers 1199, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  3. Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Cowles Foundation Discussion Papers 937, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  4. Karine Van-Der-Straeten, 2005. "Product differentiation when consumers may choose not to buy: Hotelling's convergence result revisited," Working Papers hal-00242963_v1, HAL. [Downloadable!]
  5. L. Lambertini & R. Orsini, 1998. "Existence of Equilibrium in A Differentiated Duopoly With Network Externalities," Working Papers 333, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  6. Sudipta Sarangi & Hrachya Kyureghian, . "Transport Cost Sharing," Departmental Working Papers 2002-08, Department of Economics, Louisiana State University. [Downloadable!]
  7. Debashis Pal, 1994. "Cournot Competition and Spatial Agglomeration," Microeconomics 9402002, EconWPA. [Downloadable!]
  8. Hoppe, Heidrun C. & Lehmann-Grube, Ulrich, 2007. "Price Competition in Markets with Customer Testing: The Captive Customer Effect," CEPR Discussion Papers 6229, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Martin Richardson, 2004. "Cultural quotas in broadcasting II: policy," ANUCBE School of Economics Working Papers 2004-443, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  10. Seo, C.S., 1992. "Interior Quality Equilibrium and the Effect of a Government Subsidy," Working Papers 92-05, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  11. Heidrun C. Hoppe & Ulrich Lehmann-Grube, 2000. "Spatial Competition in Credit Markets," CSEF Working Papers 32, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  12. Martin Richardson, 2004. "A high-rise on Main Street: Hotelling with mobile consumers," ANUCBE School of Economics Working Papers 2004-444, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
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