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Spatial Competition with Interacting Agents

Author

Listed:
  • Bertrand Ottino-Loffler

    (Center for Applied Mathematics, Cornell University, Ithica, New York, U.S.A)

  • Forrest Stonedahl

    (Department of Mathematics and Computer Science, Augustana College, Illinois, U.S.A.)

  • Vipin Veetil

    (Department of Economics, Sorbonne University, Paris, France)

  • Uri Wilensky

    (Center for Connected Learning and Computer-Based Modeling Northwestern Institute on Complex Systems, Northwestern University, Evanston, Illinois, U.S.A.)

Abstract

Using agent-based modeling, we generalize Hotelling?s model of spatial competition with more than two firms in a two-dimensional space. Firms choose both price and location to maximize profits. The principle of minimum differentiation does not hold in general. Local duopolies emerge from the interaction betweenfirms. Firms do not spread uniformly across the two-dimensional space, nor do they all charge the same price. Firms in more competitive locations charge lower prices and generate less profit.

Suggested Citation

  • Bertrand Ottino-Loffler & Forrest Stonedahl & Vipin Veetil & Uri Wilensky, 2017. "Spatial Competition with Interacting Agents," International Journal of Microsimulation, International Microsimulation Association, vol. 10(3), pages 75-91.
    • Handle: RePEc:ijm:journl:v10:y:2017:i:3:p:75-91
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    HOTELLING; PRICE COMPETITION; AGENT-BASED MODELING;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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