We consider a duopoly with horizontally differentiated firms, where firms decide the long-term plans (locations) in addition to short-term issues (prices). As in Bárcena-Ruiz and Casado-Izaga (2014), we introduce a third entity in the city by considering the presence of a policymaker that...

This paper builds on a duopoly with horizontally differentiated firms, where firms simultaneously decide the long-term plan (location) in addition to the short-term issue (price). As in Bárcena-Ruiz and Casado-Izaga (2014), we introduce a third entity in the city by considering the presence of...

We study the effect of quadratic differentiation costs in the Hotelling model of endogenous product differentiation. The equilibrium location choices are found to depend on the magnitude of the differentiation costs (relatively to the transportation costs supported by consumers). When the...