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 |
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Dynamics and equilibria under incremental horizontal differentiation on the Salop circle. / Vermeulen, B.; Poutré, La, J.A.; Kok, de, A.G.
Eindhoven : Technische Universiteit Eindhoven, 2013. 14 p. (BETA publicatie : working papers; Vol. 436).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 -