A Dynamic Evolution Model of Service Firms Based on Hotelling Competition

In order to find the dynamic evolution process and its affecting factors, this paper set up a dynamic evolution model of two firms. We find that the market share of each firm is not only decided by its own price, waiting time and quality initially, but also by its competitor's price, waiting time, quality and the consumer's satisfactory degree. We also tested the model's validity through simulation by an example. In the end we draw some conclusion and give some advice to the service firm.