Minimal and maximal product differentiation in Hotelling's duopoly

Economides, Nicholas

doi:10.1016/0165-1765(86)90124-2

Cited by 227 publications

(140 citation statements)

References 6 publications

Supporting

Mentioning

129

Contrasting

Unclassified

Order By: Relevance

“…The closest locations for which this equilibrium exists are, therefore, x 1 = l/4, x 2 = 3l/4. Comparing our results with those of GT, the equilibrium region in our case is smaller 5 . Price competition increases under concave costs, and firms separate more to avoid a price war.…”

Section: Horizontal Differentiationsupporting

confidence: 62%

“…An example of stores and consumers' locations TRANSPORTATION COSTS 1 The literature on product differentiation started with Hotelling (1929) and it is vast, nowadays. For example, D'Aspremont et al (1979), Economides (1986), Gabszewicz and Thisse (1986) or Anderson (1988) , among others, have analyzed the existence of the sequential first-locate-then-price equilibrium in the linear model of product differentiation under alternative convex specifications of the transportation cost function.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

A Note on Product Differentiation under Concave Transportation Costs

Arguedas

Hamoudi

2008

Cuadernos de Economía

View full text Add to dashboard Cite

Concavity of transportation costs has been rarely considered in the linear model of product differentiation, although it seems a reasonable assumption in many contexts. In this paper, we extend the results by Gabszewicz and Thisse (1986) about the existence of the sequential first-location-then-price equilibrium to the case where transportation costs are concave in distance. Thus, there exists a unique sequential equilibrium in the model of vertical differentiation which involves maximal differ- entiation, while the sequential equilibrium under horizontal differentiation fails to exist. In this latter case, under given locations, firms need not be sufficiently far from each other for a price equilibrium to exist. In fact, a possible equilibrium involves both firms being located near one extreme of the city. In that case, the demand of the furthest firm is non-connected.

show abstract

Section: Horizontal Differentiationsupporting

confidence: 62%

Section: Introductionmentioning

confidence: 99%

A Note on Product Differentiation under Concave Transportation Costs

Arguedas

Hamoudi

2008

Cuadernos de Economía

View full text Add to dashboard Cite

show abstract

“…7 We obtain similar results under linear-quadratic transport cost (see Gabszewicz and Thisse, 1986) or under a more general family of convex transportation costs given by t(d) = td α , where d denotes distance and 1 < α ≤ 2 (see Economides, 1986 andAnderson et al, 1992, chapter 6). In Appendix 1, we generalize our results by allowing any convex transportation cost function.…”

Section: Introductionsupporting

confidence: 49%

Product differentiation with consumer arbitrage

Aguirre

Espinosa

2004

International Journal of Industrial Organization

View full text Add to dashboard Cite

We determine the equilibrium to a game where two firms set delivered price schedules and consumers simultaneously declare where they want to take delivery of the product.Equilibrium pricing policies provide incentives for consumers not to demand their preferred varieties but rather to purchase more standard varieties. This behavior may decrease market diversity: the demanded varieties tend to agglomerate around the market center. We also show that it is efficient for the cost of adapting the product to consumers to be shared through arbitrage, but oligopoly gives rise to an inefficient level of personal arbitrage.

show abstract

“…0 where x is the distance between firm and consumer. Then, Economides (1986) using the family of transportation cost a functions C(x) 5 x ,1 , a , 2, showed that the region of existence of equilibrium is enlarged with the convexity of the consumers' utility function (price plus travel cost). Afterwards, Gabszewicz and Thisse (1986) showed that the combination of linear and quadratic terms in a convex transportation cost function, i.e., C(x) 5 2 ax 1 bx , a .…”

Section: Introductionmentioning

confidence: 99%

Equilibrium existence in the circle model with linear quadratic transport cost

Frutos

Hamoudi

Jarque

1999

Regional Science and Urban Economics

View full text Add to dashboard Cite

We treat the problem of existence of a location-then-price equilibrium in the circle model with a linear quadratic type of transportation cost function which can be either convex or concave. We show the existence of a unique perfect equilibrium for the concave case when the linear and quadratic terms are equal and of a unique perfect equilibrium for the convex case when the linear term is equal to zero. Aside from these two cases, there are feasible locations by the firms for which no equilibrium in the price subgame exists. Finally, we provide a full taxonomy of the price equilibrium regions in terms of weights of the linear and quadratic terms in the cost function.

show abstract

Minimal and maximal product differentiation in Hotelling's duopoly

Cited by 227 publications

References 6 publications

A Note on Product Differentiation under Concave Transportation Costs

A Note on Product Differentiation under Concave Transportation Costs

Product differentiation with consumer arbitrage

Equilibrium existence in the circle model with linear quadratic transport cost

Contact Info

Product

Resources

About