The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Jul, 1985, Volume 53, Issue 4
https://doi.org/0012-9682(198507)53:4<767:TPOMDH>2.0.CO;2-N
p. 767-782
A. de Palma, J.-F. Thisse, V. Ginsburgh, Y. Y. Papageorgiou
The so-called Principle of Minimum Differentiation, stated by Hotelling, has been challenged by many authors. This paper restores the Principle by showing that n firms locate at the center of the market and charge prices higher than the marginal cost of production when heterogeneity in consumers' tastes is "large enough."
