### Abstract

Original language | English |
---|---|

Pages (from-to) | 811-837 |

Number of pages | 27 |

Journal | International Journal of Game Theory |

Volume | 47 |

Issue number | 3 |

DOIs | |

Publication status | Published - Sep 2018 |

### Keywords

- Hotelling's location model
- Network externalities
- Subgame perfect Nash equilibrium
- SPATIAL COMPETITION
- DIFFERENTIATION
- EQUILIBRIUM
- STABILITY

### Cite this

*International Journal of Game Theory*,

*47*(3), 811-837. https://doi.org/10.1007/s00182-018-0615-0

}

*International Journal of Game Theory*, vol. 47, no. 3, pp. 811-837. https://doi.org/10.1007/s00182-018-0615-0

**Hotelling's location model with negative network externalities.** / Peters, Hans; Schröder, Marc; Vermeulen, Dries.

Research output: Contribution to journal › Article › Academic › peer-review

TY - JOUR

T1 - Hotelling's location model with negative network externalities

AU - Peters, Hans

AU - Schröder, Marc

AU - Vermeulen, Dries

N1 - NO DATA USED

PY - 2018/9

Y1 - 2018/9

N2 - We study a variation of hotelling’s location model in which consumers choose between firms based on travel distances as well as the number of consumers visiting each firm. The model in which the network externality is the same for all firms was proposed by kohlberg (econ lett 11:211–216, 1983), who claims that no equilibrium exists for more than two firms. We assume the network effects to be linear and, in contrast to the claim in kohlberg (econ lett 11:211–216, 1983), derive a condition under which a subgame perfect nash equilibrium exists for four and six firms. Moreover, we show that for more than two firms the equilibrium locations of the firms are different from the equilibrium locations in hotelling’s location model. Our results suggest that a subgame perfect nash equilibrium exists if and only if the number of firms is even. We also provide examples of subgame perfect equilibria in which the network externality is different for some of the firms.

AB - We study a variation of hotelling’s location model in which consumers choose between firms based on travel distances as well as the number of consumers visiting each firm. The model in which the network externality is the same for all firms was proposed by kohlberg (econ lett 11:211–216, 1983), who claims that no equilibrium exists for more than two firms. We assume the network effects to be linear and, in contrast to the claim in kohlberg (econ lett 11:211–216, 1983), derive a condition under which a subgame perfect nash equilibrium exists for four and six firms. Moreover, we show that for more than two firms the equilibrium locations of the firms are different from the equilibrium locations in hotelling’s location model. Our results suggest that a subgame perfect nash equilibrium exists if and only if the number of firms is even. We also provide examples of subgame perfect equilibria in which the network externality is different for some of the firms.

KW - Hotelling's location model

KW - Network externalities

KW - Subgame perfect Nash equilibrium

KW - SPATIAL COMPETITION

KW - DIFFERENTIATION

KW - EQUILIBRIUM

KW - STABILITY

U2 - 10.1007/s00182-018-0615-0

DO - 10.1007/s00182-018-0615-0

M3 - Article

VL - 47

SP - 811

EP - 837

JO - International Journal of Game Theory

JF - International Journal of Game Theory

SN - 0020-7276

IS - 3

ER -