Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107848
Authors: 
Heijnen, Pim
Soetevent, Adriaan
Year of Publication: 
2014
Series/Report no.: 
Tinbergen Institute Discussion Paper 14-131/VII
Abstract: 
This paper extends Hotelling's model of price competition with quadratic transportation costs from a line to graphs. We derive an algorithm to calculate firm-level demand for any given graph, conditional on prices and firm locations. These graph models of price competition may lead to spatial discontinuities in firm-level demand. We show that the existence result of D'Aspremont et al. (1979) does not extend to simple star graphs and conjecture that this non-existence result holds more generally for all graph models with two or more firms that cannot be reduced to a line or circle.
Subjects: 
spatial competition
Hotelling
graphs
JEL: 
D43
L10
R12
Document Type: 
Working Paper

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