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Hotelling's "Ice cream dealers" with elastic demand

Author

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  • Tönu Puu

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

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).

Suggested Citation

  • Tönu Puu, 2002. "Hotelling's "Ice cream dealers" with elastic demand," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(1), pages 1-17.
  • Handle: RePEc:spr:anresc:v:36:y:2002:i:1:p:1-17 Note: Received: October 2000/Accepted: August 2001
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    References listed on IDEAS

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    2. Mishra, Padmaja & Parikh, Ashok, 1992. "Household Consumer Expenditure Inequalities in India: A Decomposition Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(2), pages 225-236, June.
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    7. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
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    Cited by:

    1. Stewart, Hayden & Blisard, Noel, 2006. "Household versus Community Effects: Who Really Pays More for Food?," 2006 Annual meeting, July 23-26, Long Beach, CA 21053, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Gallay, Olivier & Hongler, Max-Olivier, 2008. "Market sharing dynamics between two service providers," European Journal of Operational Research, Elsevier, vol. 190(1), pages 241-254, October.
    3. Billio, Monica & Casarin, Roberto & Ravazzolo, Francesco & van Dijk, Herman K., 2013. "Time-varying combinations of predictive densities using nonlinear filtering," Journal of Econometrics, Elsevier, pages 213-232.
    4. 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.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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