Abstract
The result of the classic Hotelling model, firms whose products are at the same price sharing the market, can not provide sufficient explanation for brand effect in the market due to its assuming that the unit transportation costs of heterogeneous products are same. We find that the consumers' brand preference are important for firms to make competitive strategy via supposing the unit transportation costs of heterogeneous products are different and analyzing its effect on product price, market share, firms' profits and social welfare under the condition of Nash equilibrium.
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