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Hotelling's "Ice cream dealers" with elastic demand

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  • Tönu Puu

    ()
    (Department of Economics, Umeå University, SE-90187 Umeå, Sweden)

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    Abstract

    This article reconsiders the Hotelling duopoly model of 1929, but under elastic demand, more precisely a linear demand function. The equilibrium state for identical firms is fully described, and the intervals of different regimes: independent monopolies, genuine duopoly competition, and price cutting wars, are specified in terms of one single compound parameter (maximum price, minus marginal production cost, divided by transportation cost).

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    Bibliographic Info

    Article provided by Springer in its journal The Annals of Regional Science.

    Volume (Year): 36 (2002)
    Issue (Month): 1 ()
    Pages: 1-17

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    Handle: RePEc:spr:anresc:v:36:y:2002:i:1:p:1-17

    Note: Received: October 2000/Accepted: August 2001
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    Cited by:
    1. Adriaan Hendrik van der Weijde & Erik T. Verhoef & Vincent A. C. van den Berg, 2012. "Hotelling Models with Price-Sensitive Demand and Asymmetric Transport Costs: An Application to Public Transport Scheduling," Tinbergen Institute Discussion Papers 12-119/VIII, Tinbergen Institute.
    2. Adriaan Hendrik van der Weijde & Erik T. Verhoef & Vincent A. C. van den Berg, 2012. "Hotelling Models with Price-Sensitive Demand and Asymmetric Transport Costs: An Application to Public Transport Scheduling," Tinbergen Institute Discussion Papers 12-119/VIII, Tinbergen Institute.
    3. Rasch, Alexander & Herre, Jesko, 2013. "Customer-side transparency, elastic demand, and tacit collusion under differentiation," Information Economics and Policy, Elsevier, vol. 25(1), pages 51-59.

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