Hotellingsregelen

Hotellingsregelen, also known as Hotelling's Law, is an economic principle that describes the tendency for competitors to make their products or services as similar as possible in order to attract the largest number of customers. This phenomenon is often observed in markets where firms compete primarily on location or price, such as retail stores or gas stations situated along a busy road.

The core idea is that if two sellers are competing for customers who are uniformly distributed along a line, each seller will position themselves at the midpoint of the market to maximize their customer base. If one seller moves from the center, they will lose customers on one side and gain fewer on the other, resulting in a net loss. Consequently, both sellers will converge at the center, offering identical products or services.

This principle, formulated by Harold Hotelling in 1929, has implications for market competition, product differentiation, and consumer choice. While it suggests a tendency towards homogenization, it doesn't account for other factors like product quality, branding, or niche market targeting, which can lead to differentiation even among competitors. The model is a simplification but remains a foundational concept in understanding spatial competition and market dynamics.