On the non-existence of equilibria in differentiated product models

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Abstract

It is sometimes suggested that the non-existence of an equilibrium in the Hotelling spatial model pointed out by d'Aspremont, Gabszewicz and Thisse (1979) is due to demand discontinuity. In this paper we first show that demand continuity is a natural property in general spatial or differential product markets. However, we also claim that the non-existence of an equilibrium is also a general property of these models. Further the assumption of no mill-price undercutting suggested by Eaton and Lipsey (1978) and Novshek (1980) is shown to be not sufficient to restore existence.

Original languageEnglish (US)
Pages (from-to)245-262
Number of pages18
JournalRegional Science and Urban Economics
Volume15
Issue number2
DOIs
StatePublished - Jun 1985
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Urban Studies

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