First introduced in a paper by Harold Hotelling in 1929, the model still holds today. Long time. So while I think using the beach location model is good for explaining two-party political equilibrium, I dont think it explains why N > 2 gas stations are located next to each other. After primaries, each candidate usually has the majority support of his or her’s party. Also known as the law of minimal differentiation, this refers to the economic observation that competitors in a market economy tend to offer products that … population, i.e. THE PECULIAR PROBLEMS OF MINERAL WEALTH ONTEMPLATION of the world's disappearing supplies of minerals, forests, and other exhaustible assets has led to demands for regulation of their exploitation. 300 consumers). In this model he introduced the notions of locational equilibrium in a duopoly in which two firms have to choose their location taking into consideration consumers’ distribution and transportation costs. the location of different sellers in a market respect to one another. What’s impressive about the model is its simple, it’s realistic, and it’s something which one can observe in any pluralistic political process. For example, one can apply Hotelling’s law to politics. Economists have long been concerned with the extraction of natural resources. Anthony Downs saw that this model could explain some aspects of political competition of candidates with respect to ideological position. Two firms offer the same product (e.g. Introduction. The intuition behind the model is as follows: Voters have single-peaked preferences. The predictions are very different for N = 3 or any N > 2. milk). Just wanted to offer a quick comment. The beach location problem that you discuss is for N = 2. The Hoteling-Downs Model of Spatial/Political Competition Harold Hoteling analyzed a model of spatial competition; i.e. Hotelling’s linear city model was developed by Harold Hotelling in his article “Stability in Competition”, in 1929. Firm 1 charges (mill) price p1, while firm 2 charges (mill) price p2. Introduction Models of electoral competition are central to the growing field of political economics. The origins of the field of nonrenewable resource economics can be traced to Harold Hotelling's “The Economics of Exhaustible Resources”.The principal result of that paper is the now-famous Hotelling Rule: for a nonrenewable resource, net price (market price minus marginal cost) must rise at the rate of interest in a competitive market equilibrium. To do so, you have to see the voters as the market and the candidates as the products. Hotelling's rule defines the net price path as a function of time while maximizing economic rent in the time of fully extracting a non-renewable natural resource.The maximum rent is also known as Hotelling rent or scarcity rent and is the maximum rent that could be obtained while emptying the stock resource. Abstract. Firm 1 is located at point x1 and firm 2 is located at point x2 (let firm 1 be to the left of firm 2, so that 0 ≤ x1 ≤ x2 ≤ 1). POLITICAL ECONOMY Volume 39 APRIL 1931 Number 2 TIIE ECONOMICS OF EXHAUSTIBLE RESOURCES CI. The seminal Hotelling–Downs model (Hotelling, 1929; Downs, 1957) and its celebrated “median voter” result with two competing politicians have shaped virtually all subsequent research on electoral competition. To one another ECONOMY Volume 39 APRIL 1931 Number 2 TIIE economics of EXHAUSTIBLE RESOURCES CI N. Political competition of candidates with respect to ideological position the extraction of natural RESOURCES candidate usually the... 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