Does the product characteristic distance get closer or not? Differentiation and imitation in a hotelling model

Koichiro Kimura

No 869, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Is the distance between the product characteristics of firms in an industry getting closer or not in competition? Although many studies have been conducted on differentiation to get farther and imitation to get closer, neither has been analyzed within t he same framework. Therefore, this study introduces the concept of imitation into a Hoteling model on differentiation. We show that although firms are more profitable if they maintain differentiation, they face a prisoner’s dilemma in imitation and therefore t ry to imitate from each other as much as possible, which decreases their profits. As a result, competition brings the distance closer by imitation and promotes the standardization of product characteristics in that industry.

Keywords: Hotelling; model|differentiation|imitation|standardization (search for similar items in EconPapers)
JEL-codes: D21 F13 (search for similar items in EconPapers)
Date: 2023-01
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Citations: View citations in EconPapers (1)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 869. 2023-01

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