To the contrary, this is a great example of how regulated markets with high barriers to entry can have adverse consequences, and why we need free markets.<p>In a free market, Hotelling&#x27;s law does not hold because a third competitor can enter the market, position themselves slightly to one side of the duopoly, and claim almost half of the market.  In order to prevent this, the incumbents will avoid placing themselves right next to each other -- and in fact, acting to minimize the threat posed by new market entrants produces the solution which is optimal for customers.<p>The situation described by Hotelling&#x27;s law only arises in a market where the duopoly can be confident of <i>remaining</i> a duopoly.<p>EDIT: The deleted comment was arguing that Hotelling&#x27;s law illustrates a failure mode of the free market and a consequential need for regulations to further the public good.