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In the two shops on the street example, Hotelling's explains that while it would better serve the customers to be each located one quarter distance from each en
by raymondgh 11y ago
In the two shops on the street example, Hotelling's explains that while it would better serve the customers to be each located one quarter distance from each end of the street, but that neither shop would risk letting the competitor relocate to capture more of the market.
Can this be expanded to mean that Hotelling's law allows for a third competitor to approach an adjacent pair and simply steal all of the business from one side of the street?
- fasteddie 11y agoHotelling's law assumes businesses are mobile, which is why its often characterized as a pushcart or ice cream truck. The business in the middle would want to move to the other side of its neighbor, and the process would repeat. As such, there's no stable equilibrium in a three-firm Hotelling's law problem.