An elasticity approach to equilibrium and preference concentration in the Hotelling game |
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Authors: | Corrado Benassi Alessandra Chirco |
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Institution: | (1) Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy;(2) Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento, Lecce, Italy |
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Abstract: | We consider the standard Hotelling price-and-location game with two firms, and show how equilibrium is affected by the shape
of the consumers’ density. By describing the latter in terms of elasticity (Esteban in Int Econ Rev 27:439–444, 1986), we
develop a framework which enables us to prove a sufficient condition for the existence of multiple asymmetric equilibria when
the density is symmetric, in terms of a lower bound on the Gini coefficient of the distribution of preferences.
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Keywords: | Hotelling game Distribution of preferences Gini coefficient |
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