Location choice when price is also a decision variable

One of the fundamental contributions of Hotelling's classic Stability in Competition paper is the focus on the interaction of the price and location choice variables. In most of the subsequent research in this area, the price dimension has been assumed away. In this paper the jointness of the two decisions is reintroduced and the results for N firms in a linear market are compared to the parametric price equilibria developed by Lerner and Singer and Eaton and Lipsey. Their conclusions are found to be valid for the N-2 interior firms in the more general model. But what has been lost because of the equal price assumption is the actions of the two exterior firms who exploit their uniqueness by charging higher prices to their captive buyers. A simulation of the dynamics of the price and location choice process confirms the analytically defined equilibria.