A non-cooperative analysis of Hotelling's location game

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

Research output: Contribution to journalArticlepeer-review


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 languageEnglish
Pages (from-to)165-186
Number of pages22
JournalGames and Economic Behavior
Issue number2
Publication statusPublished - Feb 1996


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