An Extension of Hotelling Model using Multi-agent Simulation

Abstract

We examine a feasibility study on multi-agent simulation for Hotelling model and then propose the prototype. Hotelling model is a theory that explains the consequence of the location competition of two sellers by analytically solving optimization problems in game situations. This model is employed to explain little product differentiation and agglomeration of retail shops. By introducing agent-based modeling and simulation, we could model complex situations which analytical approach can't explain. In particular, it will be widely applicable a relationship between change of consumer preference due to time change and seller's repositioning, and shopping vulnerable as an interaction of consumers and retailers.