Abstract: Aiming at the duopoly market composed of two traditional retailers, a case that one of the retailers chooses to increase service provision is considered, and what kind of service strategy the retailer adopts is studied. Based on the Hotelling model, a retailer's decision-making model is constructed under the two modes of a single retailer adopting a charging service strategy and a free service strategy to obtain the retailer's optimal profit, optimal price and the effect of the retailer's increased service, and the optimal profit and optimal price of two retailers under different modes are compared. Finally, a numerical example analysis and verification show that whether it is a strategy of providing a service for a fee or a strategy of providing a service for free, the retailer who increases the service can obtain higher profits than if it does not increase the service. When the price of charging services is within a lower range, it is better for retailers to adopt a charging service strategy; when the price of charging services is within a higher range, it is better for retailers to adopt a free service strategy.

Key words: Hotelling model, duopoly competition, service strategy, retailer