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Article
On the limits and possibilities of the Principle of Minimum Differentiation
International Journal of Industrial Organization (1999)
  • Jeroen Hinloopen
  • Charles van Marrewijk
Abstract
Introducing a finite reservation price in Hotelling's spatial duopoly with linear transportation costs shows that (i) there does not exist a pure strategy symmetric location equilibrium if the reservation price is `high', (ii) there is a continuum of (monopolistic) equilibria if the reservation price is `low', and (iii) there exists a unique pure strategy symmetric location equilibrium (in which the two firms compete with each other and cover the entire market) if the reservation price is `intermediate'. The equilibrium distance between the two firms in the latter case is at least a quarter and at most half the length of the market.
Keywords
  • reservation price,
  • spatial duopoly
Publication Date
July, 1999
DOI
https://doi.org/10.1016/S0167-7187(97)00059-3
Citation Information
Jeroen Hinloopen and Charles van Marrewijk. "On the limits and possibilities of the Principle of Minimum Differentiation" International Journal of Industrial Organization Vol. 17 Iss. 5 (1999) p. 735 - 750
Available at: http://works.bepress.com/hinloopen/33/