Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92884
Authors: 
Matsumura, Toshihiro
Matsushima, Noriaki
Yamamori, Tetsuo
Year of Publication: 
2010
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 776
Abstract: 
Previous theoretical researches show that learning from good performers yields intense competition and results in the low profitability of firms. These researchers do not take into account differentiation strategies being referred as a useful strategic tool to mitigate competition. We introduce an evolutionary (learning) game into a duopoly model with product differentiation on the Hotelling line. We find that central agglomeration appears in the unique stochastically stable state in which the equilibrium price is equal to the marginal cost of firms. This implies that perfectly competitive equilibrium appears even when firms have an opportunity to differentiate themselves through product differentiation and to mitigate competition.
Subjects: 
product positioning
two dimensional choice
Walrasian
evolutionally stable
spatial agglomeration
JEL: 
C73
D41
D43
R32
Document Type: 
Working Paper

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