Hotelling´s Competition for Price and Location of Elasticity Demand Product

Based on Hotelling model, this paper studies the optimal strategies of location and price for elastic demand product whose unit transportation cost can be neglected. According to the location and price of two surrounding enterprises, the core enterprise´s making optimal strategies program can be divided into three models, and each model includes several situations. We get the optimal solution for each situation. Based on this, the global optimal strategies for each model are found. Using the result, a universal way for enterprise´s making optimal strategies of price and location is given. Finally, using numeric simulation, the result is confirmed to be right and helpful for enterprise