Price Competition on Graphs

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 10-126/1

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Market Structure, Firm Strategy, and Market Performance: General ; Size and Spatial Distributions of Regional Economic Activity
• Subject: spatial competition ; Hotelling ; graphs ; Hotelling-Modell ; Preiswettbewerb ; Nichtkooperatives Spiel ; Graphentheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Soetevent, Adriaan R.
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/86894
• Last update: 10.03.2025, 11:45 AM CET