IDEAS home Printed from https://ideas.repec.org/a/ecm/emetrp/v55y1987i4p911-22.html
   My bibliography  Save this article

Equilibrium in Hotelling's Model of Spatial Competition

Author

Listed:
  • Osborne, Martin J
  • Pitchik, Carolyn

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.

Suggested Citation

  • Osborne, Martin J & Pitchik, Carolyn, 1987. "Equilibrium in Hotelling's Model of Spatial Competition," Econometrica, Econometric Society, vol. 55(4), pages 911-922, July.
    • Handle: RePEc:ecm:emetrp:v:55:y:1987:i:4:p:911-22
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0012-9682%28198707%2955%3A4%3C911%3AEIHMOS%3E2.0.CO%3B2-X&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    2. A. Smithies, 1941. "Optimum Location in Spatial Competition," Journal of Political Economy, University of Chicago Press, vol. 49(3), pages 423-423.
    3. A. P. Lerner & H. W. Singer, 1937. "Some Notes on Duopoly and Spatial Competition," Journal of Political Economy, University of Chicago Press, vol. 45(2), pages 145-145.
    4. 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.
    5. Gal-or, Esther, 1982. "Hotelling's spatial competition as a model of sales," Economics Letters, Elsevier, vol. 9(1), pages 1-6.
    6. R. J. Aumann & Y. Katznelson & R. Radner & R. W. Rosenthal & B. Weiss, 1983. "Approximate Purification of Mixed Strategies," Mathematics of Operations Research, INFORMS, vol. 8(3), pages 327-341, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kelemen, József, 2020. "Szimultán Hotelling-modell Cobb-Douglas-hasznosságfüggvénnyel [A simultaneous Hotelling model with a Cobb-Douglas utility function]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 14-30.
    2. Javier Elizalde & Markus Kinateder & Ignacio Rodríguez-Carreño, 2015. "Entry regulation, firm’s behaviour and social welfare," European Journal of Law and Economics, Springer, vol. 40(1), pages 13-31, August.
    3. Daniel Serra & Charles Revelle, 1997. "Competitive location and pricing on networks," Economics Working Papers 219, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Fournier, Gaëtan & Van Der Straeten, Karine & Weibull, Jörgen W., 2020. "Spatial competition with unit-demand functions," TSE Working Papers 20-1072, Toulouse School of Economics (TSE).
    5. Mostapha Diss & Eric Kamwa, 2019. "Simulations in Models of Preference Aggregation," Working Papers hal-02424936, HAL.
    6. Stefan Roth, 1999. "Möglichkeiten und Grenzen ökonomischer Positionierungsmodelle," Schmalenbach Journal of Business Research, Springer, vol. 51(3), pages 243-266, March.
    7. Sinitsyn, Maxim, 2008. "Characterization of the support of the mixed strategy price equilibria in oligopolies with heterogeneous consumers," Economics Letters, Elsevier, vol. 99(2), pages 242-245, May.
    8. Javier Elizalde & Markus Kinateder & Ignacio Rodríguez-Carreño, 2014. "Entry Regulation in a Linear Market with Elastic Demand," Faculty Working Papers 02/14, School of Economics and Business Administration, University of Navarra.
    9. Dimitrios Xefteris & Iván Barreda‐Tarrazona & Aurora García‐Gallego & Nikolaos Georgantzís, 2023. "Catalog competition: Theory and experimental evidence," Economic Inquiry, Western Economic Association International, vol. 61(1), pages 122-137, January.
    10. Figerl, Jürgen & Grandner, Thomas, 2008. "Job quality and wages in duopsony," Department of Economics Working Paper Series 121, WU Vienna University of Economics and Business.
    11. Luis Garcia-Perez & Juan Grau-Climent & Juan C. Losada & Ramon Alonso-Sanz, 2024. "Simulation of the Stackelberg–Hotelling Game," Games, MDPI, vol. 15(5), pages 1-25, October.
    12. Sinitsyn, Maxim, 2009. "Price dispersion in duopolies with heterogeneous consumers," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 197-205, March.
    13. Jürgen Figerl & Thomas Grandner, 2008. "Job quality and wages in duopsony," Department of Economics Working Papers wuwp121, Vienna University of Economics and Business, Department of Economics.
    14. Webers, H.M., 1996. "The Location Model with Reservation Prices," Other publications TiSEM f2c29198-01e5-4c50-8c27-b, Tilburg University, School of Economics and Management.
    15. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    16. Bertrand Ottino-Loffler & Forrest Stonedahl & Vipin Veetil & Uri Wilensky, 2017. "Spatial Competition with Interacting Agents," International Journal of Microsimulation, International Microsimulation Association, vol. 10(3), pages 75-91.
    17. Emanuele Bacchiega & Elias Carroni & Alessandro Fedele, 2023. "Monopolistic Duopoly," BEMPS - Bozen Economics & Management Paper Series BEMPS101, Faculty of Economics and Management at the Free University of Bozen.
    18. Paul Heidhues & Botond Köszegi, 2004. "The Impact of Consumer Loss Aversion on Pricing," CIG Working Papers SP II 2004-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    19. Brand, Christina & Sieg, Gernot, 2022. "An integral interval timetable for long-distance passenger rail services: Time to reconsider targeting on-track competition," Economics of Transportation, Elsevier, vol. 32(C).
    20. Oz Shy, 2024. "Hotelling’s Model with Firms Located Close to Each Other," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(3), pages 649-668, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecm:emetrp:v:55:y:1987:i:4:p:911-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.