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has been cited by the following article:
TITLE: On Transportation Cost and Product Differentiation in Hotelling’s Model
AUTHORS: Youping Li
KEYWORDS: Hotelling’s Model; Transportation Cost; Product Differentiation
JOURNAL NAME: Theoretical Economics Letters, Vol.2 No.1, February 23, 2012
ABSTRACT: We model transportation cost in Hotelling’s model as a general exponential function and analyze firms’ location choice. As a first step, we take prices as exogenous and focus on the positioning strategy of the firm whose product generates a lower net-of-price utility. We find the firm locates further away from its competitor when the transportation cost (if convex) becomes more convex and when it (if concave) becomes more concave. Minimum differentiation is obtained when the transportation cost is linear in travel distance.