Hotelling Model Business & Marketing Essay Research Paper (Essay Sample)

Hotelling Model
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Hotelling Model
Hotelling Model is founded on the relationship between pricing behavior of organization and location. In what is often represented as a fixed length, all consumers in this model are not only identical but also evenly dispersed along the line. In this way, firms and consumers respond fluctuation in demand as well as the economic environment. In this paradigm, Cairns (2018) cites that firms do not have variations for product attributes since they compete while pricing their product in one dimension, that is the geographical placement. Until they attain equilibrium over consumers, competing firms have varying advantages and disadvantages. Hotelling prescribes a vicious cycle where firms have to mull locational strategies that make them favorable. Even so, that is never a guarantee as competitors pursue the same paradigms in a counteractive move. What emerges is business attempting to achieve the best fit in the operational envelopment without experiencing costs of movement along the locational bloc. Therefore, the model applies to traditional consumers who view products as entire substitutes to attain absolute value.