TITLE:
A Brief Explanation of the Logic behind the Location Choice of Fast Food Restaurants in China
AUTHORS:
Muyan Xie
KEYWORDS:
Hotelling’s Model, Cournot Competition, Location Choice, Market Share, Profit Maximization
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.9 No.9,
September
22,
2021
ABSTRACT: Chinese
market is relative new for fast food chains. In this article, we will explore
the competition between the McDonald’s and KFC. We will review two papers, each
one focusing on one different aspect of the competition mode we are studying.
For the Mayer’s model, we can apply the profit’s concept into our Hotelling
model. For the electoral vote model, we can incorporate the concept of market
share. We will try to quantify the variables involved in the real world fast
food market. We will assume an imaginary line of positions for the firms to
choose. Then, in the section of Theoretical Nash Equilibrium, we will try to solve the strategic setting and apply
the principles further in the extensions. Finally we will find empirical
evidence, which conforms perfectly to our propositions. To sum up, we propose
that KFC and McDonald’s clustering at the center are of reason, generating maximum profit and
market share, creating a stable Nash Equilibrium.