Using a Hotelling-type product differentiation model (linear city model), we investigate the location strategies of upstream and downstream firms. We show that when transport costs of upstream firms are large, higher transport costs decrease the level of product differentiation of downstream firms. We also show that more inefficient transport technologies of upstream firms may enhance welfare. ...

This paper develops a theoretical foundation for the undercut-proof equilibrium (see Shy, 1996, 2002; Morgan and Shy, 2013). In a general spatial setting, the set of undercut-proof prices is equivalent the core of a non-transferable utility cooperative-game, played on the set of outcomes that are feasible in Bertrand competition. The result depends critically on two conditions: First, firms mus...

This paper studies a competitive Hotelling-style market with two symmetric banks that decide the pricing and location of their automated teller machines (ATMs). Two different systems are considered in this paper: an unregulated model wherein banks are allowed to set surcharges, and a regulated model in which surcharges are banned. We derive equilibrium outcomes and compare them in the two syste...

This article introduces technology choice into a Hotelling model of spatial competition. This yields two entry deterrence devices, as well as complex strategic choices for the firms and a rich picture of industry structure. Depending on cost parameters and market size, firms may choose to over-invest or to under-invest. Industry structure is typically asymmetric either in terms of the locations...

We show that the presence of sufficiently significant switching costs, which are increasing in the degree of product differentiation, generates an equilibrium configuration with maximal differentiation within the framework of a Hotelling model with linear transportation costs. The equilibrium with maximal differentiation offers a formalization of the idea that competing firms have noncooperativ...

We show that the presence of sufficiently significant switching costs, which are increasing in the degree of product differentiation, generates an equilibrium configuration with maximal differentiation within the framework of a Hotelling model with linear transportation costs. The equilibrium with maximal differentiation offers a formalization of the idea that competing firms have noncooperativ...

This paper suggests two directional multivariate tests that aim at establishing superiority of a treatment over a control in at least one of several endpoints that are assumed to have a multivariate normal distribution. One of these tests is a one-sided, scale-invariant version of the classical Hotelling T²-test. The other is based on a summary score with weights derived from the data. Both tes...

This paper shows how political parties differentiate to reduce electoral competition. Two parties choose platforms in a unidimensional policy space, and then in a continuum of constituencies with different median voters candidates from the two parties compete in Hotelling-Downs competition. Departing from party platform is costly enough that candidates do not take the median voter’s preferred p...

The Analysis of Variance (ANOVA) is a commonly used statistical test in Statistics. The test compares the equality of means against the alternative that at least one of the means are different. In this report, we introduce a multivariate test known as Wavelet Analysis of Variance extending ANOVA to profile (functional) data. The test exploits the dimension reduction, noise elimination propertie...