A Duopoly Research On A Varied Hotelling Model

For the unstable price and output in Edgeworth model, Hotelling establishes a spatial model to confirm that the price and output are unique and stable when the transport cost exists. Hotelling model provides an outlet to research spatial competitions, but can not efficiently explain collusion. This essay will relax the assumption about consumer's rigid demand, as a result, we find out the changes of comsumer's behavior in the former simple model, and then consider a demand density function, weaken the location competition, and emphasis on the unit transport cost. The research focusing on price game can effectively explain the collusion of duopoly, and the conclusions of the latter model depend on unit transport cost.