Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87500
Authors: 
Hinloopen, Jeroen
Martin, Stephen
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-101/VII
Abstract: 
We introduce a cost of location into Hotelling’s (1929) spatial duopoly. We derive the general conditions on the cost-of-location function under which a pure strategy price-location Nash equilibrium exists. With linear transportation cost and a suitably specified cost of location that rises toward the center of the Hotelling line, symmetric equilibrium locations are in the outer quartiles of the line, ensuring the existence of pure strategy equilibrium prices. With quadratic transportation cost and a suitably specified cost of location that falls toward the center of the line, symmetric equilibrium locations range from the center to the end of the line.
Subjects: 
Horizontal product differentiation
spatial competition
cost of location
JEL: 
D21
D43
L13
Document Type: 
Working Paper

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