# Location-then-price competition with uncertain consumer tastes

## Author Info

Listed author(s):
• Kieron Meagher

()

• Klaus Zauner
Registered author(s):

## Abstract

We investigate Hotelling’s duopoly game of location-then-price choices with quadratic transportation costs and uniformly distributed consumers under the assumption that firms are uncertain about consumer tastes. When the uncertainty has a uniform distribution on the closed interval $[-\frac{L}{2},\frac{L}{2}]$ , with $0 > L > \infty$ , we characterize the unique equilibrium and the socially optimal locations. Contrary to the individual-level random utility models, we find that uncertainty is a differentiation force. For small (large) sizes of the uncertainty, there is excessive (insufficient) differentiation. More uncertainty about consumer tastes can have positive or negative welfare effects, depending on the size of the uncertainty. Copyright Springer-Verlag Berlin/Heidelberg 2005

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1007/s00199-004-0520-6

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

## Bibliographic Info

Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 25 (2005)
Issue (Month): 4 (06)
Pages: 799-818

as
in new window

 Handle: RePEc:spr:joecth:v:25:y:2005:i:4:p:799-818 DOI: 10.1007/s00199-004-0520-6 Contact details of provider: Web page: http://www.springer.com Order Information: Web: http://www.springer.com/economics/economic+theory/journal/199/PS2

## References

No references listed on IDEAS
You can help add them by filling out this form.

## Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

## Corrections

When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:25:y:2005:i:4:p:799-818. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

or (Rebekah McClure)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.