Location (Hotelling) Games and Applications

This article provides an introduction into the Hotelling literature of spatial and product differentiation. We examine the impact of the market structure on price competition and equilibrium differentiation. We find that spatial differentiation is not uniformly high or low but depends on a number of market parameters such as transport costs, demand elasticity, number of firms, and density of consumers, among others. Keywords: Hotelling applications; spatial competition; mill pricing; discriminatory pricing; principle of maximum differentiation

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