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Survival at the center--The stability of minimum differentiation

  • Hehenkamp, Burkhard
  • Wambach, Achim

Abstract We model a Hotelling market with multidimensional product differentiation in an evolutionary framework. Both evolutionary stability (in the sense of Schaffer, 1989) and stochastic stability (following [Kandori et al., 1993] and [Young, 1993]) are analyzed. It is shown that firms move towards the center in product space, i.e. a "principle of minimum differentiation" on all dimensions of the product space applies.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 76 (2010)
Issue (Month): 3 (December)
Pages: 853-858

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Handle: RePEc:eee:jeborg:v:76:y:2010:i:3:p:853-858
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