Competition in Multiple CharacteristicsAn Empirical Test of Location Equilibrium

Resumen

With products differentiated in multiple dimensions, the location equilibrium for a duopolistic market exhibits aximum differentiation in one dimension and minimum differentiation in all the other dimensions. This paper analyses whether this equilibrium arises using real data for the Spanish movie theatre exhibition market where the firms (cinemas) are differentiated along two dimensions (their geographical location and the set of movies exhibited). Data not only shows a trade-off such that closer theatres tend to choose a higher proportion of different movies but also there is a tendency towards either max-min or min-max product differentiation.