Notes 8: Models of Spatial Competition
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چکیده
Products are said to be differentiated if consumers consider them to be imperfect substitutes. For example all consumers may agree about the relative quality of two types of the same good, but may differ in their willingness to pay for such differences. If consumers view brands in an industry as imperfect substitutes in this way, a firm may raise its price above that of its rivals without losing all its customers. This type of differentiation is usually called vertical product differentiation.
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