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More on Hotelling's stability in competition

1995; Elsevier BV; Volume: 13; Issue: 1 Linguagem: Inglês

10.1016/0167-7187(94)00445-8

1873-7986

Amoz Kats,

Game Theory and Applications

It is well known that Hotelling's model of spatial competition has no location-price equilibrium in pure strategies. The present paper studies that model where the linear space is replaced by a one-dimensional bounded space without a boundary, i.e. a circle. It is shown that the modified model does have a subgame perfect equilibrium in pure strategies and that the 'equal distance' location pattern is an equilibrium.