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Hotelling's Law
Why Rival Shops End Up Side by Side
- Big ideas
- 51 s
Two ice cream sellers, one beach, same prices. Each keeps creeping toward the middle until they stand back to back, and customers at the ends walk twice as far. Economist Harold Hotelling described this trap in 1929.
Sources (3)
- H. Hotelling, "Stability in Competition", The Economic Journal 39 (1929), pp. 41–57
- D. B. Ridley, "Hotelling's Law", Palgrave Encyclopedia of Strategic Management (opens in a new tab)
- d'Aspremont, Gabszewicz & Thisse, "On Hotelling's 'Stability in Competition'", Econometrica 47 (1979)
