, Volume 6, Issue 2, pp 103-108

Differentiated Bertrand markets: restoring the minimum differentiation principle

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Abstract

I introduce non-perfect substitutability between products into the spatial Bertrand model. I show that if goods are complements, the firms always agglomerate. If goods are substitutes, the firms agglomerate if the transportation costs are not too high.

I thank A. Batabyal (the Editor) and two anonymous referees for useful comments and suggestions.