Launhardt and Hotelling

The paper discusses the relation between the justly famous Hotelling’s [1929] paper on stability in competition and the corresponding passages of the often ignored Launhardt’s [1885] book, devoted to mathematical economics. Launhardt is sometimes credited for the anticipation of Hotelling’s spatial model and the analysis of oligopolistic competition with product differentiation. The paper argues that Launhardt’s model is in fact significantly more general, in particular in introducing vertical along with horizontal differentiation, and that his analysis of strategic competition is correspondingly finer and more complete. Thus, the earlier author does not appear to be a forerunner of the later, rather the later a successor of the earlier. However, Hotelling did (objectively) innovate in a significant way, by endogenizing locations as strategic variables, and principally by developing the concept of an abstract characteristics space, which transcends the geographical space.