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Hotelling's “Ice cream dealers” with elastic demand

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Abstract.

This article reconsiders the Hotelling duopoly model of 1929, but under elastic demand, more precisely a linear demand function. The equilibrium state for identical firms is fully described, and the intervals of different regimes: independent monopolies, genuine duopoly competition, and price cutting wars, are specified in terms of one single compound parameter (maximum price, minus marginal production cost, divided by transportation cost).

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Authors and Affiliations

  1. Department of Economics, Umeå University, SE-90187 Umeå, Sweden (e-mail: tonu.puu@econ.umu.se), , , , , , SE

    Tönu Puu

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  1. Tönu Puu
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Received: October 2000/Accepted: August 2001

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Puu, T. Hotelling's “Ice cream dealers” with elastic demand. Ann Reg Sci 36, 1–17 (2002). https://doi.org/10.1007/s001680100062

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  • DOI: https://doi.org/10.1007/s001680100062

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