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Location choice with asymmetric data in the Hotelling model

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  • Shuaicheng Liu

Abstract

This paper analyzes the location choices of firms in the Hotelling model, in which one firm has consumer data and can practice price discrimination, while the other firm without data can only set uniform price. The equilibrium results show medium differentiation. The location choices of firms can alleviate the inhibition of data asymmetry on competition and increase consumer surplus. And we consider the consumers' transportation costs as an exponential function of distance. When this exponent increases, horizontal differentiation increases, but market prices fall, benefiting consumers.

Suggested Citation

  • Shuaicheng Liu, 2023. "Location choice with asymmetric data in the Hotelling model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(4), pages 855-878, December.
    • Handle: RePEc:bla:ijethy:v:19:y:2023:i:4:p:855-878
    DOI: 10.1111/ijet.12382
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    References listed on IDEAS

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