Vermeulen, Ben; La Poutré, Han; de Kok, Ton - Volkswirtschaftliche Fakultät, … - 2012
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...