The Extension And Analysis Of Hotelling Game Model

For enterprise operation, the foremost task of production and management is to choose the goods to be produced and sold, and then the proper location and price to get the maximum profit. Based on the maximum profit, the enterprise always hopes to find a most beneficial location. Meanwhile, differences between locations represent differences between products. The enterprise may occupy more market share by lower its product's price, but this conduct may increase or reduce its profit, so the enterprise should consider the both sides when pricing. At the same time, a lot of information is unknown in real business competition, so the market analysis under incomplete information situation is also very important.Game theory is to study the rational decision-making of the players which are interdependent and mutual influential, as well as the results of the equilibriums. After decades of rapid development, game theory has made tremendous achievements in many fields. Since the Hotelling model was put forward in 1929, it is being further studied and applied. Hotelling model was usually used in the location selecting and price analysis between competitors, it was also used to analyze the problems for differentiated products.Directing at the separate analysis of transportation costs discrepancy, production costs discrepancy and incomplete information, this thesis systematically discusses the problems such as the enterprise's pricing and location, social cost, market access and coercion strategies. By analyzing the different conditions, the model is more close to the real market. This thesis contains three parts as follows:1. This thesis discusses the relationship between transportation costs and enterprise's profit under the circumstances of transportation costs discrepancy. It also analyzes the effect of cost changes on enterprises. Equilibrium price should be first solved and then the location and social cost problems should be discussed under the circumstances of production costs discrepancy. When locating the enterprise the government should not only analyze enterprise's profit but also consider the social cost to get a maximum social utility.2. The thesis investigates the enterprise's entry to market and the coercion strategies of incumbent enterprise. The enterprise outside the market decides whether to enter the market or not according to the price of the enterprise within the market and the cost to enter the market. The enterprise within the market takes corresponding measures to prevent the enterprise outside the market from entry. Coercion strategies include expanding production sales territory, increasing production brands, promoting production supply intensity and so on.3. The thesis considers the Hotelling model under the circumstance of incomplete information. If the first enterprise's cost is definite, and there are two possibilities existing in the second enterprise; we solve its equilibrium solution, and compare it with Nash Equilibrium under the circumstance of complete information, and then analyze the differences between the two prices and the reasons.