Friday, February 13, 2009

Extending the Hotelling model: Incomplete information and Networks

Alberto Pinto
(Departamento de Matemática, Universidade do Minho)

Abstract: This paper develops a theoretical framework to study spatial price competition in a Hotelling-type network game. Each firm $i$ is represented by a node of degree $k_{i}$, where $k_{i}$ is the number of firm $i$'s direct competitors (neighbors). We investigate price competition á la Hotelling with complete and incomplete information about the network structure. The goal is to investigate the effects of the network structure on firms' prices and profits. We first analyse the benchmark case where each firm knows its own degree as well as the rivals' degree (complete information). Then, in order to understand the role of information in the price competition network, we also analyse the incomplete information case where each firm knows its type (i.e. number of connections) but not the competitors' type.

Friday, February 13, 2009
Time: 11h00
Room: Sala Delta, Edificio Quelhas, ISEG