2002/05 | LEM Working Paper Series | |
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The Max-Min Principle of Product Differentiation: An Experimental Analysis. |
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A. Mangani and P. Patelli
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Abstract | ||
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TTheoretical models of multidimensional product differentiation predict that in duopoly
firms differentiate maximally along one dimension and minimally along the other dimensions.
We experimentally reproduce a market in which firms can differentiate their
products along two horizontal dimensions. The main result is that subjects do not
differentiate their products and locate near the center consumers' distribution.
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