Quaderni del Dipartimento di Scienze Economiche e Matematico-Statistiche dell'Università del Salento - Collana di Economia

We develop a model of horizontal differentiation with a non-uniform symmetric distribution of consumers’ preferences. Through a simple parametrization, we solve the price-location game as a function of the degree of consumers' concentration towards the middle. A symmetric equilibrium is shown to exist for all values of the concentration parameter, provided that the consumers' density is differentiable at the centre of the support of the distribution. At this equilibrium, an increase in consumer concentration is associated to a reduction in product differentiation. When the distribution becomes succiently concentrated, two asymmetric equilibria arise which coexist with the symmetric one.