The Max-Min Principle of Product Differentiation: An Experimental Analysis

Andrea Mangani () and Paolo Patelli

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: Theoretical models of multidimensional product differentiation predict that in duopoly firms differentiate maximally along one dimension and minimally along the other dimensions. We experimentally reproduce a market in which firms can differentiate their products along two horizontal dimensions. The main result is that subjects do not differentiate their products and locate near the center consumers' distribution.

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Date: 2002-12-09
New Economics Papers: this item is included in nep-exp
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