Ahmaendah asked:
Car dealers are typically located close to one another, they cluster in one section of town. Interpreting this behavior with the Hotelling Model, would you say that price competition is intense in the industry for car sales? Why or why not?
I don’t think it’s intense because cars have both vertical and horizontal differentiation.
That sounds about right.
I think it could go either way – depending on what type of dealerships are clustered around each other.