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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Mixed equilibrium in a pure location game: the case of n ≥ 4 firms
Organization Unit
  • Christian Ewerhart
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 168
ISSN 1664-7041
Number of Pages 21
Date 2014
Abstract Text The Hotelling game of pure location allows interpretations in spatial competition, political theory, and professional forecasting. In this paper, the doubly symmetric mixed-strategy equilibrium for n ≥ 4 firms is characterized as the solution of a well-behaved boundary value problem. The analysis suggests that, in contrast to the cases n = 3 and n → ∞ , the equilibrium for a finite number of n ≥ 4 firms tends to overrepresent locations at the periphery of its support interval. Moreover, in the class of examples considered, an increase in the number of firms universally leads to a wider range of location choices and to a more dispersed distribution of individual locations. The results are used to comment on the potential benefit of competition in forecasting markets.
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Keywords Location, Hotelling game, mixed-strategy equilibrium, boundary value problem, Hotelling-Regel, Ressourcenallokation, Wettbewerb, Gleichgewichtstheorie