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| Author: | Cremer, H. Thisse, J-F. |
| Title: | Location models of horizontal differentiation: a special case of vertical differentiation models |
| Journal: | Journal of Industrial Economics
1991 : JUN, VOL. 39:4, p. 383-390 |
| Index terms: | LOCATION PROBLEM MODELS PRODUCT DIFFERENTIATION |
| Language: | eng |
| Abstract: | The relationship between two families of models of product differentiation is investigated. The main result is that every model belonging to a very large class of Hotelling-type models of horizontal differentiation is actually a special case of a vertical product differentiation model. The defining characteristic of vertical product differentiation is that all consumers have the same ranking of the variants of a product. In the case of horizontal product differentiation, there is no such "natural" ranking of the variants. In spite of these different definitions , it can be shown that the equilibria emerging in the two categories of models are identical in a well defined sense. |
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