Control in Social and Economic Systems

Numerical solution of Hotelling's Game in secure strategies

M. Iskakov, A. Iskakov

Institute of Control Sciences of RAS

Abstract: We study the price-location game in the classical model of spatial competition proposed by H.Hotelling in 1929 with the linear transport costs and elastic demand. We employ the concept of equilibrium in secure strategies (ESS) which allows to solve the subgame of choosing prices for any locations. The numerical solution of the two-stage location-price Hotelling game is presented. The obtained results are interpreted and interesting economic effects of the model are discussed.

Keywords: Hotelling, spatial competition, equilibrium in Secure Strategies.

UDC: 021.8 + 025.1
BBK: 78.34