Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2010-12-13
Revision-Date: 2011-08-11
Number: 10-126/1
Author-Name: Adriaan R. Soetevent
Author-Workplace-Name: University of Amsterdam
Title: Price Competition on Graphs
Abstract: This paper extends Hotelling's model of price competition with quadratic transportation costs from a line to graphs. I propose an algorithm to calculate firm-level demand for anygiven graph, conditional on prices and firm locations. These graph models of price competitionmay lead to spatial discontinuities in firm-level demand. I show that the existence resultof D'Aspremont et al. (1979) does not extend to simple star graphs and I conjecture thatthis non-existence result holds more generally for all graph models with two or more firmsthat cannot be reduced to a line or circle.
Classification-JEL: D43, L10, R12
Keywords: spatial competition, Hotelling, graphs
File-Url: https://papers.tinbergen.nl/10126.pdf
File-Format: application/pdf
File-Size: 1190925 bytes
Handle: RePEc:tin:wpaper:20100126