Location models as models of product choice

DOI10.1016/0022-0531(85)90112-7MaRDI QIDQ1065695zbMATH OpenOpenAlexFDO

Authors Alan Slivinski, Ignatius J. Horstmann

Publication date 1985

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0022-0531(85)90112-7

zbMATH Keywords

choice of productcircular modelsgoods-as-locations modelsline segmentPrinciple of Minimum Differentiation

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24) Production theory, theory of the firm (91B38)

Review text

Markets in which firm choice of product is an economic decision are commonly analyzed using a variant of the location model pioneered by Hotelling. This paper develops a framework for formalizing the idea that a set of consumers with preferences defined over an abstract set of commodities can be represented as if they behaved as is typically assumed in the goods-as-locations models. With this framework in place, we are able to derive the preference and technology assumptions underlying the two most common versions of these models, the line segment and circular models. This framework also makes it possible to determine the foundations of the now well-known Principle of Minimum Differentiation.

Recommendations

• A foundation of location theory: Consumer preferences and demand
• Models à la Lancaster and à la Hotelling: when they are the same
• Minimal and maximal product differentiation in Hotelling's duopoly
• Product differentiation and location decisions under demand uncertainty
• scientific article; zbMATH DE number 858900

Cites work

• Equilibrium in simple spatial (or differentiated product) models
• scientific article; zbMATH DE number 3479762 (Why is no real title available?)
• scientific article; zbMATH DE number 3287697 (Why is no real title available?)
• On a Class of Equilibrium Conditions for Majority Rule
• The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition

Cited in

(8)

• A foundation of location theory: Consumer preferences and demand
• Product variety and competitive discounts
• Models à la Lancaster and à la Hotelling: when they are the same
• Location decisions: The role of uncertainty about consumer tastes
• Consumer flexibility, data quality and location choice
• scientific article; zbMATH DE number 4060987 (Why is no real title available?)
• scientific article; zbMATH DE number 858900 (Why is no real title available?)
• Location decision of managerial firms in an unconstrained Hotelling model

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