Competitive location and entry deterrence in Hotelling's duopoly model

Abstract

This paper analyzes the problem of two firms competing in a common linear market with demand distributed continuously over the market. The firms wish to maximize their respective profits by appropriate choice of number of facilities and their locations. Equilibrium location strategies are derived for uniform and symmetric triangular demand distributions. It is shown that pioneering advantage may help a firm overcome its cost disadvantage with respect to a competitor. © 1995.