Abstract
AbstractThis paper develops a theoretical framework to study price competition in a Hotelling-type network game, extending the Hotelling’s model of price competition with linear transportation costs from a line to a network. Under explicit conditions on the production costs and road lengths, we exhibit the existence of a pure Nash equilibrium strategy. We study the effect of small perturbations on the localizations of firms and we conclude that, for networks with all degrees above two, the node localization is optimal.KeywordsNash EquilibriumTransportation CostPrice StrategyMarket SizePrice CompetitionThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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