Survival at the Center - The Stability of Minimum Differentiation

Burkhard Hehenkamp (1) , Achim Wambach (2)

1 Faculty of Economics and Social Sciences
2 Department of Economics

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 analysed. 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.

Mots clés: Hotelling; evolutionary game theory; product differentiation; location choice; C73; L1; R3

Domaines: Économie et finance quantitative [q-fin]

Burkhard Hehenkamp, Achim Wambach. Survival at the Center - The Stability of Minimum Differentiation. Journal of Economic Behavior and Organization, 2010, 76 (3), pp.853. ⟨10.1016/j.jebo.2010.09.018⟩. ⟨hal-00911820⟩