### Abstract

Original language | English |
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Place of Publication | Eindhoven |

Publisher | Technische Universiteit Eindhoven |

Number of pages | 14 |

Publication status | Published - 2013 |

### Publication series

Name | BETA publicatie : working papers |
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Volume | 436 |

ISSN (Print) | 1386-9213 |

### Fingerprint

### Cite this

*Dynamics and equilibria under incremental horizontal differentiation on the Salop circle*. (BETA publicatie : working papers; Vol. 436). Eindhoven: Technische Universiteit Eindhoven.

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*Dynamics and equilibria under incremental horizontal differentiation on the Salop circle*. BETA publicatie : working papers, vol. 436, Technische Universiteit Eindhoven, Eindhoven.

**Dynamics and equilibria under incremental horizontal differentiation on the Salop circle.** / Vermeulen, B.; Poutré, La, J.A.; Kok, de, A.G.

Research output: Book/Report › Report › Academic

TY - BOOK

T1 - Dynamics and equilibria under incremental horizontal differentiation on the Salop circle

AU - Vermeulen, B.

AU - Poutré, La, J.A.

AU - Kok, de, A.G.

PY - 2013

Y1 - 2013

N2 - We study product differentiation on a Salop circle when firms relocate incrementally due to bounded rationality. We prove that, under common assumptions on demand, firms relocate only when two or more firms target the same niche. In any other case, there is no incentive for any firm to relocate incrementally. We prove that all distributions in which firms are sufficiently far apart in product space are unstable Nash equilibria. We prove, in particular, that the classical equidistant distribution is an unstable Nash equilibrium that cannot emerge from another distribution. However, we show that if each firm is engaged in head-on rivalry with one other competitor, the industry converges to a ’equidistantesque’ equilibrium of clusters of rivals.

AB - We study product differentiation on a Salop circle when firms relocate incrementally due to bounded rationality. We prove that, under common assumptions on demand, firms relocate only when two or more firms target the same niche. In any other case, there is no incentive for any firm to relocate incrementally. We prove that all distributions in which firms are sufficiently far apart in product space are unstable Nash equilibria. We prove, in particular, that the classical equidistant distribution is an unstable Nash equilibrium that cannot emerge from another distribution. However, we show that if each firm is engaged in head-on rivalry with one other competitor, the industry converges to a ’equidistantesque’ equilibrium of clusters of rivals.

M3 - Report

T3 - BETA publicatie : working papers

BT - Dynamics and equilibria under incremental horizontal differentiation on the Salop circle

PB - Technische Universiteit Eindhoven

CY - Eindhoven

ER -