Product flexibility and price competition in Hotelling's duopoly - Archive ouverte HAL
Article Dans Une Revue Mathematical Social Sciences Année : 2010

Product flexibility and price competition in Hotelling's duopoly

Résumé

In a Hotelling's duopoly with a general transportation cost function, we study competition through catalog: each firm chooses at the same time a price and a location. With simultaneous catalog offers, there is no equilibrium in pure strategies for high valuations of the consumers, while a Stackelberg equilibrium exists under mild conditions. The follower is better off than the leader, whose price is smaller: the location preemption effect is weaker than the price leadership effect. We obtain closed-form solutions for the linear and quadratic cost cases. Using these results, we discuss the nature of competition depending on the relative flexibility of products and prices.
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Dates et versions

hal-00641873 , version 1 (16-11-2011)

Identifiants

  • HAL Id : hal-00641873 , version 1

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Pierre Fleckinger, Thierry Lafay. Product flexibility and price competition in Hotelling's duopoly. Mathematical Social Sciences, 2010, 60 (1), pp.61-68. ⟨hal-00641873⟩
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