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.

LanguageEnglish
Pages1450-1456
JournalEconomics Bulletin
Volume37
Issue number3
StatusPublished - 2 Jul 2017

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Hotelling
Vendors
Attraction
Transportation costs
Location decision
Economics
Spatial competition
Pull
Emotion
Factors
Psychological

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Hotelling competition with behaviourally-confused vendors. / Fairchild, Richard; Mallard, Graham.

In: Economics Bulletin, Vol. 37, No. 3, 02.07.2017, p. 1450-1456.

Research output: Contribution to journalArticle

Fairchild, Richard ; Mallard, Graham. / Hotelling competition with behaviourally-confused vendors. In: Economics Bulletin. 2017 ; Vol. 37, No. 3. pp. 1450-1456.
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