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A Unidirectional Hotelling Model

Author

Listed:
  • Mohammed Kharbach

    (HEC Montreal)

Abstract

The standard hotelling model with linear transportation costs predicts an aggregation of the two competing firms in the middle of the customers support interval (Minimum Differentiation Principle). Using quadratic transportation costs, the two firms would locate in the opposite extremities of the interval (Maximum Differentiation Principle). Both cases assume bidirectional purchasing ability : a consumer can buy from a firm whether it is located on her right or on her left. In a situation where a consumer can buy only from firms located on her right (left), we show that one firm would locate at the right (left) end of the hotelling line while the other would locate at 3/5 (2/5) from the left end.

Suggested Citation

  • Mohammed Kharbach, 2009. "A Unidirectional Hotelling Model," Economics Bulletin, AccessEcon, vol. 29(3), pages 1814-1819.
    • Handle: RePEc:ebl:ecbull:eb-09-00409
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P29.pdf
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    References listed on IDEAS

    as
    1. de Palma, A, et al, 1985. "The Principle of Minimum Differentiation Holds under Sufficient Heterogeneity," Econometrica, Econometric Society, vol. 53(4), pages 767-781, July.
    2. Jehiel, Philippe, 1992. "Product differentiation and price collusion," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 633-641, December.
    3. James W. Friedman & Jacques-Francois Thisse, 1993. "Partial Collusion Fosters Minimum Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 631-645, Winter.
    4. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
    5. repec:ulb:ulbeco:2013/1759 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stefano Colombo, 2011. "Spatial price discrimination in the unidirectional Hotelling model with elastic demand," Journal of Economics, Springer, vol. 102(2), pages 157-169, March.
    2. Torbenko, A., 2015. "Linear City Models: Overview and Typology," Journal of the New Economic Association, New Economic Association, vol. 25(1), pages 12-38.
    3. Kai Andree, 2011. "Product differentiation and spatial agglomeration in a unidirectional Cournot model," Letters in Spatial and Resource Sciences, Springer, vol. 4(3), pages 167-172, October.
    4. Stefano Colombo, 2013. "Spatial Cournot competition with non-extreme directional constraints," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(3), pages 761-774, December.
    5. Takeshi Ebina & Daisuke Shimizu, 2012. "A unidirectional Hotelling model revisited," Economics Bulletin, AccessEcon, vol. 32(4), pages 2870-2875.
    6. Chia-Hung Sun, 2014. "Spatial Cournot Competition in a Linear City with Directional Delivery Constraints," The Japanese Economic Review, Japanese Economic Association, vol. 65(3), pages 344-374, September.

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    More about this item

    Keywords

    Hotelling; unidirectional; equilibrium; location;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General

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