Hotelling’s model of spatial competition
My sister lives in north of atlanta. During Christmas holiday, our family drive into malls and malls through highway exits. Stability in Competition Harold Hotelling (1929) The Economic Journal | link In this paper, consumers are uniformly distributed along a line (a street, beach, political spectrum). Location is the only dimension of differentiation. There are two firms and each firm chooses a single location on the line. Entry and exit are ignored. Consumers buy from the firm that minimizes price + transportation cost. Every consumer buys from one of the firms; there is no opting out. Transportation cost increases linearly with distance. Either prices are exogenous or competition forces them to be identical, so location is the only strategic variable. ...