Hotelling's competition with relative performance evaluation

摘要

This paper studies the impact of relative performance evaluation (RPE) on the equilibrium locations in a Hotelling model with quadratic transportation cost. It is shown that equilibrium location varies from maximum differentiation to minimum differentiation, depending upon the relative strength of the RPE effect over the competition effect. Moreover, social welfare is greater with than without RPE. (C) 2015 Elsevier B.V. All rights reserved.