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## NetLogo User Community Models(back to the NetLogo User Community Models) ## Location Gameby Jeff Russell (Submitted: 08/13/2013)
## WHAT IS IT?
This is a simple model of competing restaurants choosing where to locate in a strip shopping mall. The model supports a series of games, outlined below, that students can use to explore the principle of minimum differentiation aka Hotelling's Law .
## HOW TO USE IT
PURPOSE: To gain experintial familiarity with the strengths and weaknesses of the principle of minimum differentiation as a model that explains the observed clustering of retail sellers at a central location.
Open the Location Game and click on "setup".
Click setup.
The counters and graphs show the cumulative number of buyers each seller receives.
## GAME 1: SOCIALLY OPTIMAL (UNIFORM DISTRIBUTION) SINGLE PLAYER
WHAT IS THE TOTAL NUMBER OF TICKS NEEDED AT THIS OPTIMAL LOCATION? DOES THIS TOTAL MATCH OTHER PLAYERS' RESULTS?
## GAME 2: SOCIALLY OPTIMAL (RANDOM DISTRIBUTION) SINGLE PLAYER
WHAT IS THE TOTAL NUMBER OF TICKS NEEDED AT THIS OPTIMAL LOCATION? DOES THIS TOTAL MATCH OTHER PLAYERS' RESULTS?
WHY IS THE TOTAL TICKS COUNT WITH A RANDOM DISTRIBUTION NOT NECESSARILY CONSISTENT WITH OTHER PLAYERS' RESULTS? DOES THIS ALTER THE SOCIALLY OPTIMAL SOLUTION?
## GAME 3: PRINCIPLE OF MINIMUM DIFFERENTIATION: TWO PLAYERS
IF LOCATION IS THE ONLY THING THAT DIFFERENTIATES YOU FROM YOUR COMPETITOR, HAVE YOU MAXIMIZED OR MINIMIZED THAT DIFFERENTIATION? IS THIS CONSISTENT WITH HOTELLING'S PRINCIPLE OF MINIMUM DIFFERENTIATION? (HOTELLING'S LAW)
HOW DOES YOUR PROFIT (NUMBER OF CUSTOMERS) AT THIS EQUILIBRIUM COMPARE TO THE PROFITS FROM THE SOCIALLY OPTIMAL LOCATIONS IN GAME 2?
HOW DOES THE SOCIAL WELFARE (NUMBER OF TICKS NEEDED) IN THIS EQUILIBRIUM COMPARE TO THE NUMBER OF TICKS USED IN THE SOCIALLY OPTIMAL OUTCOME OF GAME 2?
## GAME 4: THREE COMPETING PLAYERS
DO YOU REACH A POINT, AS IN GAME 3, WHERE EVERYONE STOPS WANTING TO CHANGE LOCATION? WHAT DOES THIS SAY ABOUT HOTELLING'S PREDICTION OF THE PRINCIPLE OF MINIMUM DIFFERENTIATION HOLDING TRUE FOR MULTIPLE SELLERS?
## GAME 5: UNEQUAL MARKET POWER AND AGRESSIVE INCUMBENT (TWO PLAYERS, THREE LOCATIONS)
IF YOU ARE THE NEW-STORE PLAYER, WHERE DO YOU WANT TO LOCATE? DO YOU EVEN WANT TO TRY TO OPEN YOUR STORE (CAN YOU SEE ANY WAY TO ALWAYS HAVE AT LEAST 15 CUSTOMERS, REGARDLESS OF WHAT THE INCUMBENT DOES?)
## GAME 6: CIRCULAR MALL TWO PLAYERS
ONCE THE CIRCULAR MALL IS CREATED, WITH TWO PLAYERS, IS THE PRINCIPLE OF MINIMUM DIFFERNTIATION OBSERVED AS SELLERS SEEK TO MAXIMIZE PROFIT?
## GAME 7 UNCERTAINTY TWO PLAYERS
GIVEN THE UNCERTAINTY OF NOT KNOWING WHERE THE OTHER TWO PLAYERS WILL LOCATE, WHERE DO YOU CHOOSE TO LOCATE? DOES THIS SEEM TO SUPPORT THE PRINCIPLE OF MINIMUM DIFFERENTIATION?
## CREDITS AND REFERENCES
Author: Dr. Jeffrey E. Russell
Email: jrussell@ashland.edu |

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