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The Importance of the Distribution of Consumers in Horizontal Product Differentiation

Antoni Calvó-Armengol and Yves Zenou ()

No 3031, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper examines the importance of the distribution of consumers in Hotelling's circle on the comparison between the optimal and the market equilibrium levels of diversity. It finds that when most consumers are located very close to the firms, the result of Salop that the equilibrium number of firms is larger than the optimal one (surplus maximizing) can be reversed.

Keywords: hotelling; market equilibrium; social optimism (search for similar items in EconPapers)
JEL-codes: D43 L12 R32 (search for similar items in EconPapers)
Date: 2001-10
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