Duopoly pricing strategy of perishable asset based on the hotelling model

Based on the Hotelling linear city model, duopoly pricing strategy was discussed when customers are homogeneous or heterogeneous. The equilibrium price and revenue were obtained under certain conditions. The results show that the higher the proportion of business customers in the market, the greater the market equilibrium price and the equilibrium income of manufacturers are. However, when other conditions were settled, the higher the business customers' unit transportation cost, the lower the market equilibrium price and the equilibrium income of manufacturers are. On the contrary, with the increase of the unit transportation cost of leisure customers, the market equilibrium price and equilibrium yields of manufacturers will not get lower. Therefore, companies should strive to improve the service quality for business customers so as to minimize the “transport cost” which they cost during their purchase and to obtain a higher market equilibrium price and profit.