Open AccessHotelling Model Analysis Based on Product Quality Difference with the Network Externality
Author(s) -
Tong Qian
Publication year - 2020
Publication title -
journal of physics. conference series
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.21
H-Index - 85
eISSN - 1742-6596
pISSN - 1742-6588
DOI - 10.1088/1742-6596/1624/2/022071
Subject(s) - network effect , externality , product (mathematics) , quality (philosophy) , economics , quadratic equation , population , econometrics , microeconomics , distribution (mathematics) , variational inequality , function (biology) , mathematics , mathematical optimization , mathematical analysis , philosophy , geometry , demography , epistemology , evolutionary biology , sociology , biology
A network externality was introduced into the two-stage dynamic Hotelling model with the quadratic function of transportation cost on the basis of the quality difference between two products. In consideration of three different position relations among the consumers’ indifference curve, quality preferences for the products and population distribution density, the existence condition of equilibrium price between two manufacturers about the Hotelling model were obtained. Attention was paid to traffic-flow distribution technology and infinite dimensional variational inequality. Finally, the influences of network externality, transportation cost, cost difference and quality difference on equilibrium prices between two manufactures were analyzed.