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Mixed equilibrium in a pure location game: the case of n≥4 firms


Ewerhart, Christian (2015). Mixed equilibrium in a pure location game: the case of n≥4 firms. The BE Journal in Theoretical Economics, 15(2):457-472.

Abstract

The Hotelling game of pure location allows interpretations in spatial competition, political theory, and strategic forecasting. In this paper, the doubly symmetric mixed-strategy equilibrium for n≥4 firms is characterized as the solution of a well-behaved boundary value problem. The analysis suggests that, in contrast to the cases n=3 and n→∞, the equilibrium for a finite number of n≥4 firms tends to overrepresent locations at the periphery of its support interval. Moreover, in the class of examples considered, an increase in the number of firms universally leads to a wider range of location choices and to a more dispersed distribution of individual locations.

Abstract

The Hotelling game of pure location allows interpretations in spatial competition, political theory, and strategic forecasting. In this paper, the doubly symmetric mixed-strategy equilibrium for n≥4 firms is characterized as the solution of a well-behaved boundary value problem. The analysis suggests that, in contrast to the cases n=3 and n→∞, the equilibrium for a finite number of n≥4 firms tends to overrepresent locations at the periphery of its support interval. Moreover, in the class of examples considered, an increase in the number of firms universally leads to a wider range of location choices and to a more dispersed distribution of individual locations.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Hotelling game, mixed-strategy equilibrium, shooting method, strategic forecasting
Language:English
Date:January 2015
Deposited On:28 Jan 2015 14:27
Last Modified:22 Jun 2016 15:17
Publisher:De Gruyter
ISSN:1935-1704
Additional Information:siehe auch Department of Economics, Working Paper No. 168: http://www.zora.uzh.ch/97669/
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1515/bejte-2014-0066

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