Optimal product variety in a Hotelling model
Consider the Hotelling linear spatial duopoly with firm uncertainty over the consumer mean. As uncertainty about the mean grows relative to the dispersion of consumers, competitive locations become socially optimal. A limit result for discontinuous, log-concave densities is also established.
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- Kieron Meagher & Klaus Zauner, 2005. "Location-then-price competition with uncertain consumer tastes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 799-818, 06.
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