Sintetia From Obama to the independence of Catalonia: lessons hidden in the 'Hotelling's Law'
The aftermath of the U.S. elections is a good excuse to revisit a theorem that every good fan to politics, especially in pop-science side, knows: Hotelling's law. Following a summary of the model-that the more knowledgeable can properly discuss two jump-theorem occult teachings that are rarely discussed, despite being their most important conclusions facing economic taco cart policy design. In conclusion also discuss the relationship of this with the rise of independence in Spain. But let's start by summarizing the model in its most authentic. A beach and two ice cream vendors
Our model starts with a beach two miles long not too busy, which operated for several years, two ice cream vendors stalls, all day assiduously frequented taco cart by bathers. The inflow volume has never been sufficient to support a third point of sale, and both sell the same brands at similar prices. That is, the utility perceived by consumers is the same in both places, so that its decision was based solely on the distance to travel to reach the same: since both are equal, consumers only seek to minimize the time lost in go for ice cream.
Moreover, the only decision every morning taco cart marketers can take the place of the beach in that stand. What is the optimal placement strategy for them? Although the rational, on a beach two miles, it would seem that the carts are colocasen approximately taco cart 1 and 2 kilometer from the beach, the truth is that they have, every morning, taco cart a very strong incentive to get as close as possible to the center from the beach. If a cart is stationed in mile 2, your competitor could win part of the competition approaching him even beyond middle of the beach. As for the left side of the beach will remain the nearest cart, some of those who used to buy the cart take less time right now to buy it. The diagram below illustrates this:
Like its competitor will not be less ready, the next morning both will go to the center and probably bet there will be where their carts, taco cart one very close together. This balance (which in this simple game is a Nash equilibrium, the best response to your opponent's possible strategies) is known as Hotelling's Law, and helps explain why many gas stations also often appear in pairs. And too often interpreted as the reason why party systems almost always end up with very similar games, fighting for the center in the most sensitive issues for society and real differences in secondary or dichotomous issues - marriage is legal between persons of the same sex? Here they do not fit half measures.
Problem analysis usually ends in the previous section, when now comes a really important part of it. While in the initial position seemed intuitive minimized travel time bather (actually is minimized to a uniform distribution at points 1/4 and 3/4 of the beach), with Hotelling solution, the maximum distance to go ... is maximized! That is, if we put the two carts compete, the final decision taco cart is a perverse equilibrium in which ice cream vendors earn the same (or less if the corners bathers prefer not to walk ice cream!) And swimmers have more time to walk across the frozen or cluster in the center of the beach, enjoying less space.
But, does this result against classical findings of the economy? Consumers choose freely choose vendors also released its position on the beach, and all worse. Well, leaving aside possible solutions as cooperatives (which easily occur in repeated games) or mobile carts, the key question to resolve the problem is: "why are there only two ice cream carts?". Consider two types of responses, and the consequences on the economic policy of each of them:
:: Existence of fixed costs: the existence of initial investment taco cart and fixed costs can act as a barrier to entry of competitors in the market. In our case, perhaps the demand is not enough to support three ice cream stands. The mere entry of a third competitor taco cart would solve the problem (in a space of one dimension as a beach), as the optimal management would really be the equidistant. In the case of two cars, a simple regulation prefijase the exact placement taco cart of the carts solve the problem, preventing competitors reach equilibrium p
The aftermath of the U.S. elections is a good excuse to revisit a theorem that every good fan to politics, especially in pop-science side, knows: Hotelling's law. Following a summary of the model-that the more knowledgeable can properly discuss two jump-theorem occult teachings that are rarely discussed, despite being their most important conclusions facing economic taco cart policy design. In conclusion also discuss the relationship of this with the rise of independence in Spain. But let's start by summarizing the model in its most authentic. A beach and two ice cream vendors
Our model starts with a beach two miles long not too busy, which operated for several years, two ice cream vendors stalls, all day assiduously frequented taco cart by bathers. The inflow volume has never been sufficient to support a third point of sale, and both sell the same brands at similar prices. That is, the utility perceived by consumers is the same in both places, so that its decision was based solely on the distance to travel to reach the same: since both are equal, consumers only seek to minimize the time lost in go for ice cream.
Moreover, the only decision every morning taco cart marketers can take the place of the beach in that stand. What is the optimal placement strategy for them? Although the rational, on a beach two miles, it would seem that the carts are colocasen approximately taco cart 1 and 2 kilometer from the beach, the truth is that they have, every morning, taco cart a very strong incentive to get as close as possible to the center from the beach. If a cart is stationed in mile 2, your competitor could win part of the competition approaching him even beyond middle of the beach. As for the left side of the beach will remain the nearest cart, some of those who used to buy the cart take less time right now to buy it. The diagram below illustrates this:
Like its competitor will not be less ready, the next morning both will go to the center and probably bet there will be where their carts, taco cart one very close together. This balance (which in this simple game is a Nash equilibrium, the best response to your opponent's possible strategies) is known as Hotelling's Law, and helps explain why many gas stations also often appear in pairs. And too often interpreted as the reason why party systems almost always end up with very similar games, fighting for the center in the most sensitive issues for society and real differences in secondary or dichotomous issues - marriage is legal between persons of the same sex? Here they do not fit half measures.
Problem analysis usually ends in the previous section, when now comes a really important part of it. While in the initial position seemed intuitive minimized travel time bather (actually is minimized to a uniform distribution at points 1/4 and 3/4 of the beach), with Hotelling solution, the maximum distance to go ... is maximized! That is, if we put the two carts compete, the final decision taco cart is a perverse equilibrium in which ice cream vendors earn the same (or less if the corners bathers prefer not to walk ice cream!) And swimmers have more time to walk across the frozen or cluster in the center of the beach, enjoying less space.
But, does this result against classical findings of the economy? Consumers choose freely choose vendors also released its position on the beach, and all worse. Well, leaving aside possible solutions as cooperatives (which easily occur in repeated games) or mobile carts, the key question to resolve the problem is: "why are there only two ice cream carts?". Consider two types of responses, and the consequences on the economic policy of each of them:
:: Existence of fixed costs: the existence of initial investment taco cart and fixed costs can act as a barrier to entry of competitors in the market. In our case, perhaps the demand is not enough to support three ice cream stands. The mere entry of a third competitor taco cart would solve the problem (in a space of one dimension as a beach), as the optimal management would really be the equidistant. In the case of two cars, a simple regulation prefijase the exact placement taco cart of the carts solve the problem, preventing competitors reach equilibrium p
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