A non-cooperative analysis of Hotelling's location game

Jonathan Thomas; Helmut Bester; Andre de Palma; Wolfgang Leininger; Ernst-Ludwig von Thadden

A non-cooperative analysis of Hotelling's location game

Jonathan Thomas, Helmut Bester, Andre de Palma, Wolfgang Leininger, Ernst-Ludwig von Thadden

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We study the location equilibrium in Hotelling's model of spatial competition. As d'Aspremontet al.have shown, with quadratic consumer transportation cost the two sellers will seek to move as far away from each other as possible. We show that the location game possesses an infinity of mixed strategy Nash equilibria. In these equilibria coordination failure invalidates the principle of “maximum differentiation” and firms may even locate at the same point.

Original language	English
Pages (from-to)	165-186
Number of pages	22
Journal	Games and Economic Behavior
Volume	12
Issue number	2
Publication status	Published - Feb 1996

Cite this

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title = "A non-cooperative analysis of Hotelling's location game",

abstract = "We study the location equilibrium in Hotelling's model of spatial competition. As d'Aspremontet al.have shown, with quadratic consumer transportation cost the two sellers will seek to move as far away from each other as possible. We show that the location game possesses an infinity of mixed strategy Nash equilibria. In these equilibria coordination failure invalidates the principle of “maximum differentiation” and firms may even locate at the same point.",

author = "Jonathan Thomas and Helmut Bester and {de Palma}, Andre and Wolfgang Leininger and {von Thadden}, Ernst-Ludwig",

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AU - Leininger, Wolfgang

AU - von Thadden, Ernst-Ludwig

PY - 1996/2

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AB - We study the location equilibrium in Hotelling's model of spatial competition. As d'Aspremontet al.have shown, with quadratic consumer transportation cost the two sellers will seek to move as far away from each other as possible. We show that the location game possesses an infinity of mixed strategy Nash equilibria. In these equilibria coordination failure invalidates the principle of “maximum differentiation” and firms may even locate at the same point.

M3 - Article

VL - 12

SP - 165

EP - 186

JO - Games and Economic Behavior

JF - Games and Economic Behavior

SN - 0899-8256

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A non-cooperative analysis of Hotelling's location game

Abstract

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