The East End, the West End, and King's Cross: On Clustering in the Four-Player Hotelling Game

21 Pages Posted: 16 Aug 2000

See all articles by Steffen Huck

Steffen Huck

University College London - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Wieland Müller

University of Vienna, Department of Economics & VCEE; Tilburg University, Department of Economics & CentER

Nicolaas J. Vriend

Queen Mary, University of London - Department of Economics

Date Written: February 2000

Abstract

We study experimentally a standard four-player Hotelling game, with a uniform density of consumers and inelastic demand. The pure strategy Nash equilibrium configuration consists of two firms located at one quarter of the "linear city," and the other two at three quarters. We do not observe convergence to such an equilibrium. In our experimental data we find three clusters. Besides the direct proximity of the two equilibrium locations this concerns the focal mid-point. Moreover, we observe that whereas this mid-point appears to become more notable over time, other focal points fade away. We explain how these observations are related to best-response dynamics, and to the fact that the players rely on best-responses in particular when they are close to the equilibrium configuration.

Keywords: Location Model, Nonconvergence, Focal Point, Best-Response Dynamics

JEL Classification: C72, C91, D21, D43

Suggested Citation

Huck, Steffen and Müller, Wieland and Vriend, Nicolaas J., The East End, the West End, and King's Cross: On Clustering in the Four-Player Hotelling Game (February 2000). Available at SSRN: https://ssrn.com/abstract=235901 or http://dx.doi.org/10.2139/ssrn.235901

Steffen Huck (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 207 679 5895 (Phone)
+44 207 916 2774 (Fax)

HOME PAGE: http://www.ucl.ac.uk/~uctpshu/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Wieland Müller

University of Vienna, Department of Economics & VCEE ( email )

Oskar-Morgenstern-Platz 1
Vienna, A-1090
Austria

HOME PAGE: http://https://homepage.univie.ac.at/wieland.mueller/

Tilburg University, Department of Economics & CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/w.mueller-3.htm

Nicolaas J. Vriend

Queen Mary, University of London - Department of Economics ( email )

Mile End Road
London, E1 4NS
United Kingdom
+44 (0)20 7882 5096 (Phone)
+44 (0)20 8983-3580 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
139
rank
204,119
Abstract Views
1,177
PlumX Metrics