Symmetric and Asymmetric Equilibria in a Model of Horizontal Differentiation

16 Pages Posted: 22 Nov 2003

See all articles by Marcella Scrimitore

Marcella Scrimitore

Universita di Lecce - Departmento of Scienze Economiche e Matematico-Statistiche

Date Written: October 2002

Abstract

We develop a model of horizontal differentiation with a non-uniform symmetric distribution of consumers' preferences. Through a simple parametrization, we solve the price-location game as a function of the degree of consumers' concentration towards the middle. A symmetric equilibrium is shown to exist for all values of the concentration parameter, provided that the consumers' density is differentiable at the centre of the support of the distribution. At this equilibrium, an increase in consumer concentration is associated to a reduction in product differentiation. When the distribution becomes sufficiently concentrated, two asymmetric equilibria arise which coexist with the symmetric one.

Keywords: Horizontal differentiation, non-uniform distribution, asymmetric

JEL Classification: L13, R39

Suggested Citation

Scrimitore, Marcella, Symmetric and Asymmetric Equilibria in a Model of Horizontal Differentiation (October 2002). Available at SSRN: https://ssrn.com/abstract=448420 or http://dx.doi.org/10.2139/ssrn.448420

Marcella Scrimitore (Contact Author)

Universita di Lecce - Departmento of Scienze Economiche e Matematico-Statistiche ( email )

Ecotekne
strada per Monteroni
Lecce 73100
Italy

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