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The Hotelling Model

In: Spatial Economic Modelling

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  • Stefano Colombo

    (Università Cattolica del Sacro Cuore)

Abstract

In this chapter, the basic Hotelling model (Hotelling in Econ J 39:41–57, 1929) is presented. First, the assumptions of the model are critically discussed. Then, the model is solved for the case of exogenous firms’ locations at the endpoints of the market and for the case of endogenous locations and quadratic transportation costs. In the latter case, it is shown that the firms tend to maximally differentiate in equilibrium in order to reduce price competition. The case of endogenous locations and linear transportation costs is also discussed: in this case, there is not an equilibrium in location and prices.

Suggested Citation

  • Stefano Colombo, 2025. "The Hotelling Model," Springer Books, in: Spatial Economic Modelling, chapter 0, pages 1-25, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-82787-7_1
    DOI: 10.1007/978-3-031-82787-7_1
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