Hotelling competition with behaviourally-confused vendors

Richard Fairchild, Graham Mallard

Research output: Contribution to journalArticle

Abstract

We consider a Hotelling spatial competition model, in which two vendors simultaneously decide, firstly, on location, and, secondly, on price. We assume quadratic transportation costs, so that the vendors would locate at maximum distance in equilibrium. However, we introduce a counter-acting behavioural/psychological/emotional 'attraction' factor that 'confuses' the vendors and pulls them together. We examine the combined effects of economic price-softening driving the vendors apart, versus behavioural attraction, on the vendors' location decision.

Original languageEnglish
Pages (from-to)1450-1456
JournalEconomics Bulletin
Volume37
Issue number3
Publication statusPublished - 2 Jul 2017

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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