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Instability in Competition: Hotelling Re-reconsidered

  • Helge Sanner

In this paper we show that Puu (2002) does not provide a stable solution to the location game, according to his own definition of stability. If the usual two-stage game is considered, where in the first stage a location is chosen once and forever, and in the second stage prices are determined, the equilibrium proves stable for a sizeable interval of parameters, however. Even though this procedure is most common in analyzing Hotelling's location problem, it is not satisfying because it exhibits an inconsistent informational structure. The search for a better concept of stability is imperative.

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File URL: http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-14299
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Paper provided by Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät in its series Volkswirtschaftliche Diskussionsbeiträge with number 79.

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Date of creation: Sep 2005
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Handle: RePEc:pot:vwldis:79
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  1. Martin Franke, 1995. "Die Reduktion der CO2-Emissionen durch Zertifikate?," Volkswirtschaftliche Diskussionsbeiträge 04, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  2. Helge Sanner & Klaus Schöler, 1997. "Competition, Price Discrimination and Two-Dimensional Distrubution of Demand," Volkswirtschaftliche Diskussionsbeiträge 12, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  3. Ingo Christoph, 1995. "Anforderungen an eine standortgerechte Verkehrspolitik in der Bundesrepublik Deutschland," Volkswirtschaftliche Diskussionsbeiträge 02, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  4. Dieter Kreikenbaum, 1996. "Kommunalisierung und Dezentralisierung der leitungsgebundenen Energieversorgung," Volkswirtschaftliche Diskussionsbeiträge 10, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
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